How to Choose an Accountant for Your Small Business
Small business owners often overlook the importance of having a good accountant on their side. The role of the accountant doesn't have to be limited to tax preparation. He can be a valuable adviser for your business year round. Here are some things your accountant should be involved in for your small business.
This is the area of expertise your accoutant should know backwards and forwards. Get an accountant who has a lot of small business clients — even better, a lot of small business clients in your industry. There are a ton of tax laws and codes, and the more experience your accountant has in your particular industry, the better he can help you optimize your tax planning. He can advise you on common practices and keep you up to date on recent developments. He should also be monitoring your business growth, and be able to advise you on options as you grow. For example, he may recommend that you change your business structure (from LLC to C-Corp) if it looks like you can see significant tax savings based on your earnings. You should also be calling your accountant before you make large purchases or enter into lease agreements to see what options are most beneficial to you from a tax standpoint.
Beyond tax considerations, your accountant should be able to advise you on all aspects of your financial planning and management. He can be a sounding board when you are considering an investment for your business. He can guide you through financial hurdles. Whether you have a problem with cash flow, credit, or collecting money due, your accountant should be the first person you call before taking any action. In addition to your business finances, you can go to your accountant for personal finance advice. Because he knows your business so well, he can make good recommendations on how you should save or invest your own money.
From labor laws to benefits, your accountant can help you navigate through all the rules and regulations required of employers. Once you have employees, you'll need to find out about workers comp insurance, health and retirement benefits, and payroll taxes. If you're not ready to have a full fledged Human Resources department, your accountant can fill in. It can get complicated, and it'll be wise to have an accountant ready to guide you, especially as your business grows. For example, some employment laws only apply after you have a certain number of employees. It's important that someone is on top of the various phases of your business, and sometimes it's just nice if it doesn't have to be you.
Numbers are a second language to accountants. You don't have to be good with numbers if you have an accountant. He can look at your sales figures and determine profitability. He can verify that your debt vs. equity ratio is appropriate. He can be a resource to help you compare your benchmarks within the industry. He can provide profit forecasts, cash flow projections, perform annual audits. These reports can help you greatly in monitoring and optimizing business performance and growth.
A good accountant is invaluable if you are seeking capital. He can help you evaluate various options available for business financing. He can read your financial statements and tell you exactly what your lenders are looking for. He can prepare you for the questions you'll need to answer and the documents you'll need to prepare. Additionally, it's likely that he'll have access to resources and contacts that will give you an edge for obtaining the best financing.
As tax season rolls around, you may want to give more thought to building a relationship with your accountant, or shop around for one who can provide expert advise for your small business.