Monday, 5 March 2012

5 Reasons to Hire an Accountant

Unless you are an accountant, accounting isn't your business - so why do it?  This post is an attempt to convince you to hire an accountant to manage your books.  You should always pay attention to your financial situation, but managing it directly is not likely the best use of your time.

Remember, accounting is a serious profession that simply can't be replaced with a $40 accounting package.  The notion that you are saving money by doing your own accounting is usually wrong.  For small businesses, your accountant needn't be a full-time employee.  You can find contract accountants who will do your month and year end books and prepare your taxes for very affordable fixed rates.

Why you should hire an accountant:

Reason 1: The opportunity cost
Every hour you spend muddling through accounting is an hour you aren't focused on your product or customers.  Could you be selling or creating something right now?  No business expert in the world will include "focus on the accounting" among their top-ten tips for executives.

Reason 2: You're doing it wrong
It's what you don't know that hurts you.  While everything seems to be working okay with your do-it-yourself accounting system, those dangerous unknown unknowns lurk in the details of your books.  They could save you money, they could cost you money.  Either way, you need to know - and accountants are more likely to know.

Reason 3: Accountants understand the law
We all know a few business owners who's lifestyle seems to be out of sync with the state of their business.  Everything is a business expense.  Everything is a tax write off.  Then the tax auditors show up.  Making mistakes here can damage both your personal and business finances.  Accountants can help you stay on the right side of the law - and still enjoy the maximum possible benefits of your position.

Reason 4: Accountants have standards and credentials
Since accountants belong to professional bodies, they adhere to national and international standards.  These standards ensure that your books can be interpreted easily by other accountants.  If your accountant wins the lottery and quits (or gets hit by a bus), your next accountant will be able to pick up where they left off.  The longer you go doing your own accounting, the longer it will take for an accountant to "sort things out" when you eventually hire one.

Reason 5: They'll help you get along better with the bank
Every business needs to foster a good relationship with its bank.  Accountants speak the same language as bankers, they know what motivates them.  Loans are an important element of a cash management strategy - you're going to need to deal with the bank.

It's fairly common for entrepreneurs to do their own accounting and delay getting an accountant. Our advice is to find an accountant as early as possible - remember reason 1.  Ask other business owners in your area who they use.  Find someone local who can get to know you and your business.  It will be one of the most important business relationships you develop.


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