Why Do I Need a Small Business Accountant?

By: Updated: February 4, 2020

Why do you need a small business accountant? What tasks can an accountant help a small business with? We examine those questions and more in this article.

An accountant can help at every stage of your business' development. While it can be helpful to hire an accountant from the business' formation, at any given stage you may only need to consult an accountant for a few hours. Here are some areas that an accountant can help you with - regardless of company size. 


Your Business Plan

When you are just starting out, consulting with an accountant while working on your business plan can be a good way to add financial projections to your plan. This can help ensure your business plan is realistic and achievable.


The Company's Legal Structure

There are different legal structure types a company can have. Companies can be: limited companies, limited liability partnerships or corporations, or sole trade or proprietors. 

As a sole trader or proprietor, you work on a self-employed basis and invoice under your own name. This can, in some cases, offset some of your living expenses against tax. However, it also means you can be held responsible for business-related obligations. Meaning, if your business fails to pay a contractor, or so on, a creditor can legally come after your personal assets. 

A limited structure limits the liability of the business to the assets owned by the business instead of you personally. However, there are exceptions.

When you start developing a new company, you'll need to consider each type to decide which is the best fit for you. Whichever option you choose will have legal requirements. An accountant can help explain the options and which is your best fit. 


Loan Applications

It can be difficult to get a loan for a small business, so it's important to ensure you have a sound business plan when you apply for a loan or overdraft. Working with an accountant can help by not only directing you to the loans that will work best for you, but it can also help to show the bank that you took finances into consideration while creating your business plan.

An accountant can also help you structure and plan loan repayments to ensure it fits into your overall revenue model.


Managing Finances

An accountant will help you keep track of who owes you money, who you owe money to, and how much

They can also help measure key business metrics to help you determine things like the ratio of salaries and other employee payments to total revenue. This can allow you to manage payroll and see how the ratio changes over time.

As well, an accountant can share information with you to help you easily see your company's financial situation and cash flow.


Dealing with the Government

Having an accountant that's knowledgeable about your business can be helpful when you need to deal with the government, which could be to:

  • Complete and file required legal compliance documents for your business;
  • Submit tax returns;
  • Keep your business up to date with tax laws;
  • Create annual account statements;
  • Keep the company's status updated in the government's company register;
  • Organize and record share/stock allocations;
  • Track when the business was formed, when a partner leaves, or when a new partner joins; and
  • Manage payroll.


Surviving Audits

In the event that your company is audited, an accountant can help direct you through the process. Being audited can be expensive, stressful, and time-consuming.

Certain accountants will allow you to purchase audit insurance when you first hire them, which means that you won't be charged extra for the increase of work for them that occurs during an audit.


Handling Growth

If your business suddenly needs to grow quicker than you anticipated, an accountant can help you manage the details.

If you're hiring new employees, they can handle payroll and employee tax management. 

If you're expanding into a new space, an accountant can help with property tax, utility payments, and budgeting.

Throughout the growth, an accountant can provide insight into how to properly grow the business to keep your finances secure and on track. 


Selling Your Business

In the event that you decide to sell your business, your accountant can help put the company's financial records in order and produce statements of accounts that you can show potential buyers. 

As well, they can help you get the most money out of selling your business. This is done by managing the way the company is sold in order to get you the most money after tax. 


Saving Money

During any stage of your business' growth, an accountant can help you find ways to save money. Whether it is through your taxes, reducing costs on your healthcare spending, or finding opportunities to decrease costs within the business, accountants work to help business owners profit as much as possible.


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