There are many articles written regarding when to hire an accountant, and opinions vary. Here’s my take on when and why you should hire an accountant.
Setting up accounting software
There are some tasks involved with running a business you should not attempt on your own and this is one of them. What are the most common problems I come across?
- Adding an excessive amount of income and expense accounts (categories).
- Not entering beginning bank and other account balances.
Most business owners complain about doing their own accounting but set up an overly complicated system when attempting it on their own. Be nice to yourself and keep it simple! Better yet, get professional help.
Even if you are just staring your business and it doesn’t make sense to outsource all your accounting tasks to an accountant, invest in hiring an accountant to set up a system for you and teach you how to maintain it. This will save you money in the long run.
Not sure how to handle a transaction? Don’t guess. If you guess wrong and eventually seek help from an accountant, the accountant has to figure out what you did, undo what you did, and handle the transaction correctly. And if that transaction is recurring and you guessed differently each time the transaction occurred, even more time is spent fixing the problem. Think about the bill you will receive from the accountant to fix your guesses. It really is cheaper to do things right the first time.
When You are Just Too Darn Busy
At some point in the life of your business, you just won’t be able to keep up with everything, including your accounting. The general guideline regarding when to outsource is revealed by your answer to this question:
- Can you earn more in sales during the time you’ve been spending on your business books than you will pay to an accountant?
Consider this. Accounting is my profession and I think I’m darn good at it. I can do a lot more accounting work in two hours than you could.
Be Honest with Yourself
If you had to choose between scrubbing your kitchen floor with a toothbrush or doing your own business accounting, which would you choose? Most business owners would rather scrub that kitchen floor with a toothbrush than deal with their business accounting. If that’s the case, just outsource it. I see too many business owners avoid their business accounting, only dealing with it a few times a year (usually when questions/issues pile up) but mostly at tax time. I call this the band-aid approach to accounting.
Without accurate, up to date financial records, you know nothing about the financial health of your business. It’s hard to make good decisions about your business if you don’t know your income has been significantly under budget the last four months and your expenses are out of control. In this economy, that’s how you lose your business. That’s why I offer monthly services for even the smallest business. Knowledge is power and you must know the financial health of your business.