Whether you own or manage a startup or small- to mid-size business (SMB), it’s important to know the right time to hire an accountant and when to seek help with other accounting and bookkeeping needs.
When answering the question, “Do I need an accountant?” you should know that every business is unique— even companies that offer the same services or products. And the answer to this question can differ significantly from one business to the next. But the size of your business is one factor that can be used to help you determine the level of accounting support you need.
Start-ups and established SMBs alike can benefit from outsourcing their accounting and bookkeeping tasks. However, in general, larger and more established companies need a different level of assistance than smaller companies and start-ups, and each company may have different financial goals.
Assessing Business Size
There are multiple ways to assess the size of a business, such as:
- Income / Sales revenue
- Number of employees
- Market share
- Capital employed
- Market capitalization
- Industry-specific measurements (e.g. total floor space in the retail industry)
All of these methods of evaluating the size of the business have various advantages and limitations. Furthermore, they are quite often dependent on the industry. For instance, 50 employees may be considered quite a lot for a corner store or bakery, yet the same number of employees would be considered quite low for even a small logging company.
Generally speaking, you can do a rough comparison of your sales revenue, profits, and number of employees to the averages for your industry to determine whether your business might be considered a small or mid-size company. If you do indeed have a mid-size business, then you might need a higher level of accounting and bookkeeping assistance compared to a small business in your industry.
Do I Need An Accountant For My Small Business?
A Look at the Accounting and Bookkeeping Needs of Start-Ups
Start-ups typically have different accounting and bookkeeping needs than established SMBs. And while there is no universally accepted definition of a business start-up, you can likely consider your business a start-up if your sales revenue and profits have yet to stabilize and your company is less than three to five years old. (Note that smaller yet established SMBs might still have accounting needs or goals that are similar to start-ups.)
In addition, start-ups are often run by entrepreneurs who are trying to wear too many hats. You might be the marketing director, customer service rep, and account manager all at the same time. You’re probably also trying to keep the books by yourself, and you’re discovering that your system isn’t as organized and efficient as you’d like it to be.
If this describes you, then you would likely benefit from the following services that an accountant can provide.
- Help with setting up your accounting system correctly
- Training to be able to use your system efficiently and adhere to accounting best practices
- Help with tax planning and preparing tax returns
- Proof of concept, business planning, and financial projections for your business growth ideas and goals like capital purchases, expanding into new products or markets, and more.
Even though you may not need a full-time accountant or bookkeeper, some initial training and tutoring paired with periodic consultations could work nicely for you.
A Glimpse Into the Accounting and Bookkeeping Needs of Established Solopreneurs
Solopreneurs work independently, without business partners or employees, and many are independent service providers like graphic designers, web designers, freelancers, or consultants. They have a high level of control over their businesses but may also do everything themselves. As a result, solopreneurs must be very adept at becoming increasingly efficient in order to scale and grow and may, at some point, outsource some business functions to other freelancers or consultants.
Solopreneurs often benefit from the following services that an accountant can provide.
- Outsourced bookkeeping services
- Catch-up bookkeeping services
- Accounts Receivable (A/R) and Collection services – invoicing customers and ensuring you get paid on time
- Accounting consulting to assess the financial health of your business and recommendations for growth
- Learning how to understand your financial statements and how to improve the financial health of your business
- Help with tax planning and preparation
In addition, solopreneurs may opt for periodic consultations with an accountant or enter into a retainer contract where they pre-pay for a specific set of services or number of consulting hours.
An Overview of the Accounting and Bookkeeping Needs of Established SMBs
Established small to mid-size businesses (and some larger start-ups) typically have efficient systems in place for their accounting and bookkeeping needs. However, these entrepreneurs or business owners may no longer have time to manage their day-to-day financial transactions themselves and lack the resources or sufficient workload to warrant hiring their own in-house accounting department. If that describes you, then it may be time to explore a higher level of service from an accounting firm.
Scalability is another consideration for the owners of established SMBs who may be thinking about expanding their company. Perhaps you would like to add some new service or product line or open additional locations. You’re starting to realize that you need to identify ways of streamlining your established systems and find opportunities for increasing sales revenue and profits. At this point, it’s time to talk to your accounting firm about signing onto a higher level of service.
In general, established small to medium-sized businesses benefit from the following services an experienced accountant can provide.
- Payroll support
- A/R and Collection services
- Accounts Payable (A/P) – ensuring your bills and expenses get paid on time
- Help with tax planning and preparation
- Scalability and Expansion – identifying ways to increase efficiency and productivity, fund major purchases, increase sales revenue and profits
- Streamlining accounting systems, processes, and procedures
Top Signs It’s Time to Outsource Your Accounting and Bookkeeping
Whether you own a start-up or an established SMB, you might still be on the fence about whether it’s time to outsource your business’s accounting and bookkeeping tasks. Here’s a look at some of the top signs that your company is definitely ready to bring in some outside help.
- You’re having trouble figuring out how to use the budget accounting software, it isn’t meeting your needs, or you’re thinking of switching to QuickBooks® or a different version of QuickBooks®.
- You’ve already switched to QuickBooks®, but you’re having trouble setting it up or using it efficiently.
- Your books are a mess, with double entries of transactions, outdated info, or accounts that won’t reconcile with your bank accounts.
- You don’t know how to produce or understand important financial statements like your Profit and Loss Statement, Balance Sheet, Cash Flow Statement, or Changes in Equity.
- You’re spending so much time on bookkeeping and accounting tasks that you’re having trouble focusing on your business.
- You aren’t sure if your books are in compliance.
When you’re ready for help with your business finances and want to ensure you find a good accountant, you can rely on Accounting Meister’s expertise. With more than 20 years of experience helping small and medium-sized businesses with their accounting needs, QuickBooks® ProAdvisor certifications, more than 3,400 hours of tutoring and training services provided, and over 850 five-star reviews from satisfied customers, you can count on us to get the job done right. Contact our office in North Port, Florida at (941) 267-1416 or schedule a consultation to learn how we can help you.