Getting a business off the ground can prove to be one of the most difficult ventures someone will undertake. Thus, a business owner must seek help during this time to get things done right and ensure that he stays afloat.
But whose help should he seek? Where should he look during such a daunting time? Surely, the first place to look is for a knowledgeable accountant. As a result, I would like to tell you why hiring an accountant should be your first move when starting a startup.
Financial experts
First up, an accountant is a financial expert. The primary goal of most businesses is to maximize profits. An accountant is highly skilled to assist in accomplishing this end. An accountant is typically educated and experienced in the field and knows how to manage a business’s finances for success.
Informed business decisions
Closely connected to the first reason is that an accountant can assist in making informed business decisions. An accountant will know how to look at a balance sheet and communicate trends in important accounts. He will be able to look at a profit and loss statement and determine if expenses are rising or falling outside of their normal ebb and flow. Such expertise is invaluable, as a business will stand or fall based on profits and losses.
Costing methods
However the accountant goes well beyond analyzing revenues and expenses; he is also capable of allocating expenses and revenues to various jobs or merchandise. Such a practice is vital for many businesses. For instance, how will the owner of a construction business know how much he profited from a recent job?
While this may seem straightforward, it is not. There are direct costs and direct labor associated with jobs, but where many business owners fall short in determining their profitability on jobs is the area of overhead. Overhead must be applied from everything to building mansions to making bouncy balls. If this is not done right, the business owner will be unaware of the profitability in the work he performs.
Tax Preparation
Tax preparation help is also another advantage of hiring an account. Tax preparation comes at year end, and it must be done right. Business owners can incur major penalties if they do not file their taxes accurately. The IRS could also accuse a business owner of fraud depending on the evidence given to them. A good accountant will be able to ensure a healthy, longstanding relationship with the IRS through tax compliance.
Tax planning
While tax preparation comes at year’s end, tax planning is a proactive approach that takes place throughout the year. Tax planning helps the business owner reduce his tax liability and prepare for retirement.
Thus, throughout the year, an accountant can assist the business owner by providing valuable information and expertise surrounding business decisions. For instance, a good accountant will be able to inform a business owner about asset depreciation and when to buy fixed assets, assist with income-shifting strategies, etc.
All these reasons and more are why it is important to start a business with a close working relationship with an accountant.