When you’re running a small business, it’s tempting to handle as much as possible yourself. Tracking expenses, sending invoices, and keeping an eye on your bank account might feel manageable when the business is relatively simple.
But as the business grows, the financial side can get harder to manage. You might hire employees, buy equipment, or apply for financing, taxes typically become more complicated, or you could reach a point where looking at your bank balance doesn’t tell you enough about how the business is actually doing.
So, when does it make sense to bring in an accountant?
Do You Really Need an Accountant?
Not every small business needs an accountant for every financial task. If your business is pretty straightforward, your records are organized, and you’re comfortable managing routine bookkeeping and tax responsibilities, you may be able to handle much of the work yourself.
An accountant becomes more valuable when the financial decisions get more complicated or when you’re no longer confident that you understand what the numbers are telling you.
The question isn’t simply, “Do I need an accountant?”
A better question is, “What financial work can I confidently handle, and where would professional help make better decisions possible?”
What Does an Accountant Actually Do?
Depending on the person and the services you hire them for, an accountant can help you:
- Prepare or review financial statements
- Understand cash flow, expenses, and profitability
- Plan for tax obligations
- Prepare business tax returns
- Set up or improve accounting processes
- Review the financial implications of major purchases
- Prepare financial information for lenders or investors
- Identify problems or inconsistencies in your financial records
- Understand the financial impact of growth or other major business changes
Note: You may not need all of those services.
A business owner who needs occasional tax assistance has very different needs from someone managing employees, multiple locations, inventory, loans, and several sources of revenue. Define your need before hiring someone to help.
What’s the Difference Between a Bookkeeper and an Accountant?
Bookkeeping and accounting are closely related, but they aren’t always the same job.
A bookkeeper generally focuses on recording and organizing the business’s day-to-day financial activity. That may include categorizing transactions, recording payments, reconciling accounts, and maintaining financial records.
An accountant can take those records a step further by analyzing financial information, preparing or reviewing financial statements, handling tax matters, and helping the owner understand what the numbers mean for the business.
There can be overlap between the two roles, and services vary from one professional to another. Instead of choosing based on a title alone, ask exactly what the person will handle and what you’ll still be responsible for.
What Financial Tasks Can You Handle Yourself?
Plenty of small business owners handle basic financial administration successfully, particularly when their businesses are relatively simple. Depending on your experience and comfort level, you may be able to:
- Record income and expenses
- Save and organize receipts
- Send invoices and track customer payments
- Reconcile your business bank account
- Review basic financial reports
- Maintain records using bookkeeping or accounting software
The IRS doesn’t require most businesses to use one specific type of recordkeeping system. Instead, the system needs to clearly show income and expenses and provide the information necessary to support what the business reports for tax purposes. That means your system doesn’t have to be elaborate, but it should be accurate, organized, and reliable.
Why Do Good Financial Records Matter?
Financial records are important all year, not just around tax time. Good records can help you understand whether the business is improving, prepare financial statements, keep track of income and deductible expenses, prepare tax returns, and support the information reported on those returns.
They also give you better information for everyday business decisions.
If sales are increasing but cash is getting tighter, you’ll want to understand why. If one service produces significantly better margins than another, that could affect where you invest your time. If expenses are growing faster than revenue, you’ll want to catch that before it becomes a larger problem.
Whether you manage the books yourself or work with a professional, the underlying information still needs to be complete and accurate. Hiring an accountant won’t make disorganized records disappear.
What Are the Signs It May Be Time to Hire an Accountant?
There isn’t one point at which every business suddenly needs accounting help. Instead, look for signs that the financial side of the business is becoming harder to manage or more important to the decisions you’re making.
You Don’t Understand Your Financial Reports
You should have a reasonable understanding of where your money comes from, where it goes, and whether the business is making money. If you receive financial reports but don’t know how to use them, an accountant may be able to help you understand what they mean and which numbers deserve your attention.
Your Books Keep Falling Behind
A few delayed transactions may not create a major problem, but months of unrecorded expenses, unreconciled accounts, or missing documents can. If bookkeeping constantly gets pushed aside because you’re focused on customers, employees, and daily operations, it may be time to get help rather than trying to catch up repeatedly.
Your Tax Situation Is Getting More Complicated
Business taxes can become more involved as your circumstances change.
For example, federal estimated-tax requirements differ depending on how the business and its owners are taxed. The IRS currently says individuals including sole proprietors, partners, and S corporation shareholders generally make estimated payments if they expect to owe $1,000 or more when filing, while corporations generally do so when they expect to owe $500 or more. Other rules and exceptions can apply.
You don’t need to memorize tax rules to run a business, but if you’re unsure what you owe, when you owe it, or how a change in the business affects your taxes, qualified professional guidance may be worthwhile.
You’re Hiring Employees
Adding employees introduces financial and administrative responsibilities that weren’t part of a one-person business.
Payroll, withholding, employment taxes, benefits, and related recordkeeping can all add complexity. The IRS, for example, requires employers to retain employment tax records for at least four years after the tax becomes due or is paid, whichever is later.
An accountant could be one part of the professional support you need as those responsibilities grow.
You’re Making a Major Purchase or Investment
Buying equipment, opening another location, taking on significant debt, or making another major investment can affect cash flow and taxes for years. An accountant can help you understand the financial consequences before you commit.
You’re Applying for Financing
Lenders typically ask for financial statements, tax returns, cash-flow information, or other documentation when evaluating a business. If your records aren’t current or you’re struggling to present a clear picture of the company’s finances, professional accounting support can help you prepare.
Your Business Is Growing More Complicated
Growth can bring more complexity to your business. Multiple revenue streams, locations, employees, inventory, loans, equipment, or business entities can make financial management harder to handle on your own.
If you’re spending more time trying to understand the finances than using them to make decisions, that’s a good reason to reconsider your current approach.
Does Every Small Business Need a CPA?
Short answer: no.
A certified public accountant, or CPA, is an accountant who has met education, examination, and experience requirements for state licensure. CPA licenses are issued through state boards of accountancy, and CPAs may provide services including tax planning, financial consulting, auditing, and assurance work.
That doesn’t mean every accounting task requires a CPA.
If you need straightforward bookkeeping, another qualified accounting professional may be able to meet your needs. If you need services that require specific credentials or you’re dealing with more complex accounting, tax, audit, or reporting matters, the professional’s qualifications become more important.
Before hiring someone, ask what credentials they hold and whether those credentials are appropriate for the work you need done. Licensing and practice requirements can vary by state, so verify professional credentials when they’re relevant to the service you’re seeking.
Could You Use a Bookkeeper and an Accountant?
Yes, and for some businesses, that division of responsibilities works well.
A bookkeeper might maintain the day-to-day records while an accountant reviews the financial picture periodically, handles tax work, or provides guidance on larger decisions. Other owners could decide to handle bookkeeping themselves and meet with an accountant only a few times a year.
The right arrangement is the one that gives you reliable financial information without paying for services you don’t need.
What Should You Ask Before Hiring an Accountant?
Before hiring an accountant, decide what you actually want help with, then ask questions that reveal how the working relationship will function.
Consider asking:
- Do you have experience with businesses like mine?
- Which services do you provide?
- Do you handle bookkeeping, tax preparation, tax planning, financial reporting, or advisory work?
- What will I remain responsible for?
- How often will we review the business’s finances?
- Who will be my regular point of contact?
- How do you charge for your services?
- What accounting software or systems do you work with?
- What records will you need from me?
- How do you communicate deadlines or problems?
- What professional licenses or credentials do you hold?
Clear expectations are important. A good working relationship should leave you with a better understanding of the business.
How Much Accounting Help Do You Need?
You may need less help than you think, or more than you’re currently getting.
Think about the work in layers:
- Recording: Are transactions being captured accurately and consistently?
- Reporting: Can you produce reliable financial statements when you need them?
- Understanding: Do you know what those reports are telling you?
- Planning: Can you use the numbers to make informed decisions about taxes, hiring, purchases, pricing, or growth?
If one of those layers is consistently breaking down, that can help you identify the type of support you actually need.
Frequently Asked Questions
Can I Do My Own Bookkeeping?
Yes. Many owners manage their own bookkeeping, especially when the business is straightforward and transaction volume is manageable.
The key is consistency. Your records need to accurately show the business’s income and expenses and support relevant tax reporting. If the work continually falls behind or you aren’t confident in the accuracy of your records, getting help may make sense.
Is an Accountant the Same as a Bookkeeper?
Bookkeepers generally focus more heavily on recording and maintaining day-to-day financial information. Accountants may analyze those records, prepare financial statements, address tax issues, or provide broader financial guidance.
Because services can overlap, ask prospective professionals exactly what they provide.
Does Every Small Business Need an Accountant?
No.
A simple business with organized records and an owner who’s comfortable managing the financial work may not need ongoing accounting support. As taxes, employees, financing, assets, or other financial decisions become more complicated, professional help could become more valuable.
Should I Hire an Accountant Before Starting a Business?
You don’t necessarily need an accountant before you begin, but there are situations where early advice can help.
If you’re choosing between business structures, making a significant initial investment, taking on partners, hiring employees, or dealing with complicated tax questions, talking with qualified legal and accounting professionals before making those decisions may help you understand the consequences.
When Should I Talk to an Accountant About a Major Business Decision?
Consider getting professional input before a decision that could have significant financial or tax consequences. That might include taking on substantial debt, buying expensive equipment, expanding to another location, changing the way the business is structured, bringing in an owner or investor, or preparing to sell the business.
Getting advice beforehand usually gives you more options than asking about the consequences after everything has already been signed.
The Bottom Line
You don’t need to outsource every financial task simply because you own a business. What matters is whether your records are accurate, you understand your financial position, and you have enough information to make sound decisions.
If those things are working well, you may be able to continue handling much of the financial work yourself. If your books are falling behind, your taxes are getting harder to manage, or you’re making important decisions without a clear financial picture, it may be time to bring in professional help.
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