For businesses just starting out, cash is tight, and to keep costs down, many owners find themselves doing everything—including taking on the role of financial manager for the company.
You may start out by tracking income and expenses on a simple spreadsheet or using a software program. When you need to file a report, you may download the forms from the Internet and fill them out manually. And when it's tax time, you'll buy an off-the-shelf tax program to get it done. That's a lot of DIY, and it could be costing you more than you think.
3 Signs It's Time to Hire
As your business grows, you'll want to consider hiring an accountant. There's no clear-cut answer as to when you should hire an accountant to take over money matters; however, there are some indicators that may signal it's time.
How comfortable are you with your business's finances? The last thing you want to do is get in hot water because you’ve messed up on your state or federal tax obligations. Do you cross your fingers and hope for the best? If so, you know your answer.
Could you be spending your time doing other things? You are your most valuable employee. When you are doing the money tasks for your business, you aren’t making money for your business. And that might be a trade off you (and your business) can no longer live with.
Are you losing money, or fear you're not making what you should? An accountant can help you pinpoint where you're losing money, and what you need to do to stop the bleeding. Here's an example: I have the best appliance repair guy in the world. He’s responsive, does really great work and he’s an all-around nice person. He’s been in business for several years.
Because of my natural curiosity into all things small business related, I love to chat with him about his business while he’s busy fixing whatever has broken in my home. On his most recent visit, he admitted that he had hit a rough patch. He was working really hard, yet making less money than he had in previous years. He even had raised prices, yet was still struggling. Not knowing what to do, he reached out to an accountant, who figured out the problem right away. His main business expenses, transportation and gas, had skyrocketed, and even with the increase in his prices, he was working at a deficit. So they promptly put their heads together to rework his pricing structure and help him have a thriving business.
4 Steps to Hire a Great Accountant
If you've decided it’s time to hire an account, follow this four-step process to find the right one for you.
1. Interview yourself. Sit in the chair of your potential accountant and ask yourself what’s most important to you. It’s important to figure out what’s most critical for you in the relationship. Jot down what might make or break the deal for you. Make sure you clearly capture your expectations.
2. Ask friends and family. Tap into your network. Checking in with people you know can help you get started with a list of potential accountants. When you’re asking for referrals, make sure you find out why the person is being referred, and what type of advice they provide. Make a list of potential providers.
3. Interview accountants. Narrow down your list to the top two or three you will interview. Prepare your questions in advance based on what you discovered during your self interview.
4. Make your decision. Sit down and go over the qualifications of each accountant. Weigh all the pros and cons, compare the list to your original list of “must haves,” and come to a decision on who would be the best fit for your business.
These steps will help you make an informed decision for your business, and free you up to focus on business growth.
Read more articles and see exclusive videos in OPEN Forum’s special section on Managing Your Money.
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