Starting and running a business can be a rewarding experience with the potential for significant growth. The financial rewards can be life-changing, and seeing your business grow and thrive can be a fulfilling experience.
However, navigating the complex waters of business management presents a set of unique challenges.
Entrepreneurs are often talented technicians. From accomplished graphic designers and fashion trend-setters to skilled carpenters and contractors. However, they are also often complete novices when it comes to managing the financial and administrative aspects of a business.
And that’s okay! This is where entrepreneurs can turn to accountants; our pocket-protected, number-crunching superheroes.
An accounting professional can steer the financial helm of your business, ensuring it stays on course. Their expertise in handling the numbers and understanding your business’ nuances can provide you with the peace of mind to focus on your core business.
In this article, we’ll explore the various benefits of hiring an accountant for a small business.
- Reviewing Documents and Contracts – Ensuring that all of your paperwork is in order, and that the contracts you enter are in your best interest.
- Acting as a Remote CFO – Overseeing the financial operations, helping with strategic planning, and ensuring your business is financially healthy.
- Guiding Business Succession Planning – Facilitating a smooth transition for when it’s time to pass the baton to the next leader.
- Estate and Trust Planning – Helping safeguard the future of your business and ensuring your assets are managed effectively and tax efficiently.
Let’s dive deeper with this question: “how does accounting help small businesses?”
(And for a bit more context on what an accountant does, you can also check out our article on the difference between accountants and bookkeepers.)
Review all documents and contracts
As a business owner, you’re probably busy promoting your business. You might be hitting the pavement making sales or creating operating procedures to support your team. This leaves little time for tedious and time-consuming paperwork.
You could certainly sit down during your evenings and weekends to tackle your growing stack of documents, but that might not be the best use of your time.
Thankfully, tedious paperwork is one of many areas that accountants shine. Plus, as an accountant myself, I can confidently say that we love this stuff!
Understanding the Paperwork
Documentation and paperwork can sometimes be like puzzles with complex language and intricate details. Thankfully, accountants are skilled in solving these puzzles. They have the know-how to read and interpret various business documents, whether they are financial statements, receipts for expenses, tax forms, or operational procedures.
An accountant doesn’t just understand these documents; they can also translate them into plain English for you. This type of translation and communication is one of the most important skills that accountants can possess.
Think of your accountant as your personal interpreter for “business language.” They break down the crucial aspects and guide you through the necessary steps. With their expert and keen insights, you can make informed decisions and ensure that your business complies with all of the necessary regulations.
Keeping Things Fair and Safe
Contracts often serve as the foundation for business relationships. Whether it’s a lease for a new office, an agreement with a supplier, or a contract with a new client, it’s important to get them right.
Here’s where your accountant steps in as your guardian and protector. They have an eye for the details and can review contracts to protect your interests and ensure that the terms are fair. They can spot any hidden clauses or terms that might not be favorable to you. This way, they make sure you enter into agreements that are solid, transparent, and beneficial for your business.
In the long run, having an accountant review your contracts can save you from potential disputes or financial pitfalls.
Saving Money and Expense Management
Next, let’s talk about one of the sweetest parts of having an accountant: saving money!
Accountants are like treasure hunters. They know where to look for hidden gems that can save you money.
They’ll dive into your accounting software to analyze business expenses and pinpoint areas where you can cut costs without hurting your business. This could be anything from finding more affordable suppliers to suggesting more cost-effective processes.
For example, at Avalon Accounting, we just did an audit of our software costs and found that we could save over $5,000 by switching to annual subscriptions and removing unused accounts.
Minimize Taxes in Your Business
Taxes can be tricky, but accountants are masters of tax laws and regulations.
They can identify tax deductions and credits that you might not be aware of. By strategically planning your taxes, they help ensure that you’re not paying more than you should.
In a nutshell, an accountant can help to optimize your expenses and make the most of tax savings. The end result is that you get to keep more coins in the company coffers.
Be the remote CFO of your company
Stepping up the game, let’s discuss a vital role in the business – the Chief Financial Officer, or CFO for short.
Imagine a ship sailing across the ocean; the CFO is like the ship’s navigator, ensuring that it sails smoothly and reaches its destination. However, having a full-time financial navigator on board can be costly for small businesses.
Enter the remote CFO, sometimes also called a “fractional CFO.”
The remote CFO is a relatively new concept where accountants can work with business owners remotely and on a part-time basis. They can help to manage cash flow, create forecasts and budgets, prepare financial reports, set goals, and help business owners make well-informed decisions.
Budgeting and Cash Management
Sailing without a map? That’s a no-go. Similarly, running a business without a budget or financial plan is just as risky.
Your budget is your financial map, guiding you through the sea of expenses and revenues. It’s a crucial tool to ensure your business ship doesn’t run out of fuel – that’s cash, in business terms.
Your accountant, acting as a remote CFO, can help you build this budget. They can work with you to forecast revenues, plan expenses, and set financial goals.
Your accountant will help your business maintain healthy cash flow by closely monitoring how the business is performing compared to the budget. With a well-planned budget, you know where to allocate resources efficiently, ensuring your ship doesn’t run aground.
Reporting and Analysis
Carrying on with our nautical theme from the last section, how do you know if your ship is in good shape?
Well, with regular check-ups and maintenance. In the business world, these check-ups come in the form of financial reports.
Your accountant can compile and interpret financial statements, such as income statements, balance sheets, and cash flow statements. These reports act as a health check for your business, reflecting its financial condition.
Your accountant can also analyze these reports to provide you with important insights. They can spot trends, identify potential issues, and suggest corrective actions. These insights are your ship’s telescope, helping you see far into the distance and navigate through potential storms.
Making Smart Decisions
Now that you have your map and a telescope, you need a wise navigator. As a remote CFO, your accountant is this navigator, guiding you through important financial decisions.
Whether it’s deciding on an investment, negotiating a deal, or evaluating a business opportunity, your accountant provides you with data-driven insights and advice.
They bring a wealth of experience and expertise to the table, helping you make informed decisions that bolster the strength and sustainability of your business.
By donning the hat of a remote CFO, your accountant becomes an essential ally in your voyage towards business success. They not only help keep the ship steady but also ensure it’s sailing full steam ahead in the right direction.
Guide business succession planning
Alright, so you’ve captained your business ship through both calm and stormy seas. But what happens when it’s time for you to hang up your captain’s hat?
Here, business succession planning is your compass. It ensures that your ship continues to sail smoothly even when you’re not at the helm.
Finding the Next Leader
Every ship needs a captain, and every business needs a leader. Your accountant is like your trusty first mate who helps you scout for the best person to take over the wheel when you’re ready to step back or move on.
It could be a family member who’s grown up watching you steer the business, or a loyal team member who has been instrumental in the business’ growth. Your accountant can assist in selecting the new leader and then move on to showing them the ropes.
Training New Business Leaders
When the time comes for a new leader to take the helm of your business, it’s vital that they’re well-prepared to navigate the challenges ahead.
Your accountant can assist in this process by ensuring that the new leader is well-trained and understands the intricacies of the business. This includes understanding the financial aspects of the business, operational procedures, and strategic planning.
The objective is to equip your successor with the tools and knowledge necessary to navigate the complexities of running the business.
Handling Taxes and Paperwork
If your business succession planning involves the addition of new owners or a change in ownership, your accountant can also manage the taxes and paperwork.
Your accountant can make sure that all the tax implications are addressed, and that the necessary documentation is properly filed. This includes understanding estate taxes, valuation of the business, and regulatory requirements.
The expertise of an accountant is critical in ensuring a smooth and compliant transition.
Help with estate and trust planning
As an entrepreneur, it’s also important to cast your sights on the future. You’ve worked hard to build your business, and naturally, you want to ensure it continues to thrive even when you’re ready to take a step back.
Planning for the Future
Estate planning is like building a blueprint for the future of your business. It involves deciding how your business assets will be distributed and managed when you retire or if you’re no longer around.
Your accountant can be an invaluable guide in this process. They can work with you to determine the value of your business, consider tax implications, and help make a plan that aligns with your wishes.
This involves liaising with other professionals to create a will and set up life insurance policies. The goal is to make sure that the business continues to operate smoothly for the next generation.
Your accountant’s support with estate planning ensures that the business you’ve nurtured continues to grow and support the ones you love into the future.
Trusts are a powerful tool in estate planning. They’re a little bit like safety deposit boxes that keep your business assets secure so you can direct the funds to exactly where you want them.
Your accountant can help you establish a trust to help minimize estate taxes and ensure a smoother transition of assets. This is especially important to make certain that your family or other beneficiaries receive the fruits of your labor without any unnecessary hassles.
Trusts can offer protection against creditors and legal claims. They help to ensure that your hard-earned assets are shielded in the event of litigation.
Creating trusts can help you to secure your business’s future and also make sure it continues to be a source of support and growth for the ones you hold dear.
It’s clear that accountants are much more than just number crunchers. They are essential supporters in the growth and success of small businesses.
Accountants take on many important roles within small businesses. From reviewing contracts to reducing expenses, accountants are there to help.
In addition to keeping an eye on the finances, they’re also strategic advisors. Accountants help plan for the future, whether it’s passing the business on to the next generation or securing its assets.
Accountants have the knowledge to make sense of complex financial matters. They can also help you to navigate the rules and regulations that come with running a business. With their guidance, you can spot opportunities, avoid potential problems, and make smart decisions based on solid data.
If you’re not yet convinced of the benefits accountants can bring to your business, please also check out our article on why accounting is important for your business.
If you’re interested in working with accountants who solely work with small businesses, please have a look at Avalon Accounting’s website. Our mission is to help small businesses thrive, and this article outlines just a few ways that Avalon can do that.
This article offers general information only, is current as of the date of publication, and is not intended as legal, financial or other professional advice. A professional advisor should be consulted regarding your specific situation. While the information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subjects discussed. All expressions of opinion reflect the judgment of the author(s) as of the date of publication and are subject to change. No endorsement of any third parties or their advice, opinions, information, products or services is expressly given or implied by RBC Ventures Inc. or its affiliates.