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Business Unplugged™
This blog features Carol Roth's tough love on business and entrepreneurship, as well as insights from Carol's community of contributors.

Hiring An Accountant Can Make or Break Your Business

Written By: Paul Herman | Comments Off on Hiring An Accountant Can Make or Break Your Business

paperwork overwhelmLet’s face it, accounting isn’t for everyone. Not to say that you don’t have the capabilities, or that accounting is a skill that can’t be learned, it’s just not everyone’s forte. As a business owner, sometimes it’s best to stick with what you know – and leave the accounting to the professionals. Hiring an accountant for your business will free up time for you to focus on what you’re passionate about.

Taking Time to Save Time with Accounting

Entrepreneurs and business owners know all your time and energy should go into growing your business and making it successful. When creating something out of nothing, it’s easy to develop a do-it-yourself mentality. Not only will managing your own finances and bookkeeping save you money, but you also will remain in control, right?

A business owner’s company is like their baby, and it can be hard to relinquish that control and delegate. However, if you’re unfamiliar with accounting or don’t have the experience, you can waste valuable hours working on the books that may not even end up being correct. Then you’ve wasted your time and have an unrealistic impression of how your business is doing. Don’t fall into this trap! Be smart and acknowledge when it’s time to hire an accounting professional who can stay on top of your books.

Consistent Financial Management for Business Owners

An accounting professional will not only make sure your financial statements are current, but they also can help you get a better look at the big picture. Business owners get wrapped up in the day-to-day issues and tasks, which is completely understandable, but can prevent them from keeping accurate records.

An accountant will make consistent entries in the books and reconcile any business checking statements, credit card statements, sales tax accounts or other types of financial accounts. This is important, especially when months have gone by and nothing has been entered in the books. It can be detrimental to your business and affect your ability to complete those everyday tasks.

Without accurate records, it’s easy to spend more than you have, resulting in a negative balance. Or, when you don’t have a handle on things, invoices can go unnoticed and therefore unpaid. This can cause problems with business relationships and even negatively affect your business’s credit rating.

Plus, it’s impossible to make sound business decisions when you don’t know how your business is doing financially. It’s important to know what’s working and what’s not. An accountant can look at all aspects and explain what’s making money and helping the business to grow, and what needs to be reassessed.

Insight into the Future of Your Business

Hiring an accountant to manage your business’s financial statements gives them, and you, invaluable insight into your business and the tools to help you save and manage money, which can make the business successful. Accountants will keep track of today’s numbers, but also will forecast future growth and predict any financial risks.

With proper financial forecasts, it’s easier to confidently make operational and staffing decisions. Plus, an accountant will notify you of any unforeseen financial problems that may arise from your decisions, which can save you thousands of dollars.

Four Tips to Working Successfully with Your Accountant

Making the decision to hire an accountant is great for your business, but it won’t matter unless you have a strong working relationship. Here are a few tips to work successfully with your accountant:

  1. Choose a CPA that is the right fit for your industry. We know your time is precious, so don’t waste it explaining the nuances of your industry to an accountant. When choosing your new financial advisor, talk to the candidates about their experience in your sector. It’s important to find an accountant who understands your business and has expertise in that area. This will help your transition, give you confidence in your new partnership and save you time down the line.
  2. Make sure your CPA is current. It may seem tedious now, but keeping an eye out for an automated office, new technology and up-to-date software will let you know that your accountant’s business runs as smoothly as yours soon will! But a good accountant is more than their technology, so make sure he or she stays informed about changes in laws or regulations that could affect your business.
  3. Communicate, communicate, communicate! It is essential to have open lines of communication with your accountant. He/she needs to be aware of your goals, expectations, issues, and the operations of your business. Your accountant needs to be fully informed so they can do their job. A good accountant will give you a schedule for sending updates, while a great accountant will implement a system that works for both of you, and your business and team.
  4. Ask questions. You will want to ask questions and bounce ideas off your accountant regarding tax planning, new revenue ideas, budgeting and cost-saving strategies. It’s important for you to understand your financial situation in order for your business to grow. Look at your accountant as a business partner because he/she can advise you on how to reach your goals, while reducing costs.

At the end of the day, hiring an accounting professional will not only take away the time and stress of handling all the financial documents, but it also will help make your business more profitable. Accurate financial records are a key component to the success of your business… and your bottom line.

[Editorial Note: Carol advocates that while delegating to an accountant is very helpful, you should not abdicate your responsibility to understand your financials and to check all work done on your behalf.]

Article written by
Paul Herman, a tax expert for individuals and businesses, is the founder of Herman & Company, CPA in Westchester, NY. After many years of "Big Eight" experience, Mr. Herman founded Herman & Company with the belief that growing businesses and successful individuals deserve a level of attention that the large firms simply cannot provide. Now, more than 25 years later, Mr. Herman continues to provide guidance and strategies to improve clients' financial well-being. For more information, visit Herman & Company or call 914-400-0300.