Accountants are not normally seen as essential for a start-up. In fact, a lot of the newer entrepreneurs I help out often see accountants as superfluous. They'll say that maybe when their company grows and proves successful they'll contract a firm, but when they are first starting out they feel too small to make it worth paying an accountant. However, I still typically try and push new entrepreneurs to look into getting an accountant as, according to a 2013 Sage Survey, most of the successful entrepreneurs interviewed brought on an accountant when their business was still really young -- fifty-three percent reported doing so right then started up. With under a week to go until the end of tax season, I thought it'd be a good idea to run through the reasons why I usually tell the new entrepreneurs I counsel to look into an accountant before opening their doors.
1. You are going to be really, really busy.
When you first start out, you'll probably be your only employee. That means you're already going to have to be your own secretary, marketer and customer service department on top of running the show. Trust me -- you don't realize just how busy you'll be running a small business until you're stuck in the trenches, trying to fix your copier while listening to a customer complain over the phone. Keeping your books and finances up to date is really important, and if you start to let that slip, it could be disastrous. A good accountant will help you keep your books zeroed out, and you on top of your money.
2. Taxes are a pain, especially for new small business owners.
The National Federation of Independent Business releases a monthly survey of small business owner concerns, and of these monthly concerns, taxes always rank high on the list. Calculating your estimated tax payments can be very tricky, as it often isn't as simple as taking last year's returns and dividing what you owed back then into four separate payments. If you've ever done your own taxes, you know just how complicated the IRS tax code is -- an accountant can be a real help, and a source of relief, when it comes to taxes.
3. Most accountants don't just file your taxes.
Accountants aren't here for the sole purpose of filing your taxes, which is something that a lot of people I talk to fail to realize. A reputable, experienced small business accountant will have dealt with hundreds of clients in your exact situation. They probably know exactly what you're worried about, and can help you navigate your state and city's rules, regulations, and compliance requirements. They can even give you some insight into what has worked for their most successful clients.
4. Investors like accountants.
Most entrepreneurs know how to pitch an idea, but when you start talking to investors, you can't just walk in with a good pitch and an impassioned plea. Investors want to see figures, growth projections, and hard data. Even if you are years away from bringing on investors, having an accountant with your company at the start means having someone who knows, and has watched, your finances from the very beginning. An accountant is an invaluable ally in creating a reasonable financial projection, and for proving your company is well-maintained and solvent.
5. Accountants make growth easier.
How do you know when it's a good time to expand? How far can you stretch finances without putting your business at risk? Most entrepreneurs like to go with their gut when making these sorts of decisions, and business acumen is a large part of successfully running a company, but you really do minimize your risk when you have someone to watch your financial back. A good accountant can help pinpoint when business picks up, and when you should think about stocking up or taking on extra orders. You don't even have to meet up in person to talk these sorts of issues - the internet and online collaboration means you can run an idea by your accountant, see what they say, and then act on their advice.
Studies on business failure regularly find poor financial planning to be the second leading cause for a company's decline. I'll be the first to admit that accountants can be expensive, but they are invaluable allies for new businesses. Not only do you get access to their years of financial experience, but you can also rest a bit easier knowing your taxes and bookkeeping are taken care of. And while I can't outright say that a new small business should hire an accountant as soon as possible, any entrepreneur worth their salt should seriously consider bringing on an accountant.