When Should You Hire An Accountant?

They say it takes first-hand knowledge to run a business successfully. But what about those areas of management that are not necessarily industry related but are still crucial? Take accounting, for example. Truth be told, even the most brilliant entrepreneurs are easily fazed by crunching those numbers.

From filing tax returns to issuing financial statements or maintaining payrolls, these responsibilities can be a struggle for untrained minds. At the same time, it explains why accountants are some of the most indispensable professionals we have around. Businesses can barely survive without their services, especially larger corporations.

So when should you think about hiring an accountant for your company? Here are a few times you should consider adding a financial whiz to your team.

1. Lack of Accounting and Tax Know-How

A quick online search will bring up tons of software for business owners who want to self-manage their finances. While these tools will definitely in handy initially, they won't fly as your company grows and evolves with bigger, more complex needs.

Financial statements can become more and more intricate, reports increasingly cumbersome, and accounting lingo might start to sound foreign. If anything, these are unmistakable clues that hiring an accountant should be in order.

On top of that, the US Tax Code can be a total maze, not to mention the regulatory nuances that come with every state. And failing to pay the right taxes for the right business type and industry can mean interest and penalties.

But this scenario could be easily prevented with an accountant who can assess your business' tax obligations early on, ensure compliance, and even defend the business during an audit.

An accountant can identify potential tax credits and deductions that the business might be entitled to, manage tax projections, and make tax season less stressful overall for you as the business owner.

2. Lack of Time

Even with a good, working knowledge of accounting and taxes, the job can take precious time away from what a business owner knows best and should be doing: running the business. Product development, marketing, customer service, and employee management are all core aspects that need your laser focus. You shouldn't let the tediousness of accounting to distract you.

On top of that, hiring an accountant means you as the business owner can concentrate on efforts that directly improve profitability. After all, that's what a business is designed to do--make money.

3. Rapid Company Growth

While driving and maintaining company growth is not rocket science, it could be tough to juggle for someone who simply has too much on their plate. Businesses don't typically grow at consistent rates either, which means you probably won't use the same approach throughout your company's entire life cycle. Again, this is where an accountant makes a world of difference.

As a trained professional, an accountant knows how to handle growth transitions so that each one is only geared towards the next step forward, not back. A shortage of staff or office space, for example, entails several issues and considerations like payroll, property taxes, and utility payments.

With their knowledge of accounting software and data, an accountant can offer helpful insights and valuable financial analysis recommendations.

4. Setting Up a Business

A business plan serves more than the general purpose of creating a guide for an upcoming venture. It can be used for many specific purposes including raising capital, applying for loans, and defining parameters in businesses owned by more than one individual or entity. While the need for this blueprint and its key benefits are pretty basic, creating the realistic plan itself is no cakewalk.

Technical knowledge, the kind an accountant is trained in, is required to develop a business plan with decisions like which business structure (proprietorship, corporation, limited liability company, etc.) is most appropriate, making sound financial projections and accurate reports, ensuring legal compliance, etc.

An accountant can cut through the red tape and get a new business up and running efficiently. The nitty-gritty details -- licenses, tax permits, employment accounts, etc. -- are so easy to take for granted. Still, they can be a real source of trouble that starts the business off on the wrong foot, causing even more complications. Given the long list of requirements per state and even per industry, errors by omission or commission can be prevented with an accountant at the helm.

5. Selling a Business

Even when the time comes to sell your business, an accountant can prove extremely valuable, thanks to their training in organizing financial records. They'll also know how to issue account statements for potential buyers and create professional presentations using specialized software and other tools.

Of course, they're also the best people to deal with prospective buyers' accountants before the new owner or owners take over. Above all, an accountant has the in-depth knowledge and experience needed to maximize profit from the sale.

Accounting for Quality

Not all accountants can offer the same benefits as they're likely to have varying credentials and specializations. There are at least ten accounting certifications, each having its own requirements in terms of education, professional experience, and testing. That said, don't just consider when it's time to hire an accountant. Think about how to choose one who fits your needs and budget for someone who fits that role.

A business is a collection of components that shape a bigger whole. Your success or failure depends on the hands that pull the strings, including your accountant. Unless the cash is in expert hands, it can head off in directions where profitability and sustainability can suffer. Bringing on a quality accountant is a move you won't regret.