The journey of many entrepreneurs begins with passion. Whether it’s spotting untapped demand in a market or finding a way to monetise your craft, starting a business can give you the freedom to do what you’ve always wanted.
But if you’re going to make this work, you’ll need to properly look after the money side of things too.
While you can learn to do this yourself, keeping track of finances pulls your time, attention, and energy away from what you got into business for in the first place.
This can lead to bad decisions, burnout, and can even cause you to lose that original spark.
The solution for this problem is simple. You need an accountant.
In this article, we cover what you’ll need to know about hiring an accountant and when to do it, so you can make an informed decision when looking for support.
It includes:
- Do I need to hire an accountant?
- What does an accountant do?
- How to hire an accountant in 5 steps
- When to ask your accountant for help
- Final thoughts
Do I need to hire an accountant?
As a business owner, it can be tempting to try to do everything yourself. But when it comes to managing your business finances, this may not be the best approach.
You need to figure out how much you’d benefit from hiring an accountant, and this will depend on:
- What your business does
- Personal preference of your role
- Your own knowledge and capabilities
- Size of your business
- Amount of work that needs doing
If the cost of hiring an accountant is holding you back, think of your business as a set of scales.
On the oneside, you have the cost of doing accounting work yourself. To calculate this, add up how many hours a month you spend doing financial tasks.
Break down your personal earnings into an approximate hourly wage and multiply these figures to reveal how much accounting costs your business each month.
On the other side, you have the cost of hiring an accountant. To calculate this, do some research around average hourly rates for accountants in your area.
Keep in mind that this will be a conservative estimate, as an accountant will get more done (and to a higher standard) in the same number of hours. Many also don’t charge by time.
If the scale tips to the left, hiring an accountant makes sense from a financial point of view.
But there is even more than that to consider:
- You’ll free up head space to focus on higher value tasks, like creating growth strategies, leading your people, and making big picture decisions.
- An accountant will make fewer mistakes than you.
- With expert knowledge of financial regulations, an accountant will make sure you’re doing everything right from a legal point of view.
- You’ll gain insights and advice that go beyond ongoing financial management.
- You’ll enjoy your role more by focussing on your passion.
You’ll probably find this is the situation you’re in. But in some cases, the scale can tip to the right. This is usually if your business is small, with very few transactions to record and only a small volume of financial data to analyse.
If this is the case, you’d still get the benefits listed above by hiring an accountant, but at a cost to the business.
If you decide to go it alone, just remember to keep those scales in mind. As your business grows, the demand for accounting and financial planning will grow, and you’ll eventually hit a tipping point where the cost of hiring help is outweighed by the demand on your time and attention.
What does an accountant do?
So, let’s say you’re pretty sure you need to hire an accountant. Before you do, you’ll need to be clear on what exactly they can help you with.
Here are the main services accountants provide:
- Audit all your financial accounts and transactions.
- Bookkeeping (you can also hire this as a specific role).
- Prepare budget forecasts.
- Run regular financial reports.
- Calculate your taxes and submit your tax returns.
- Reconcile accounts payable (what you owe) and accounts receivable (what people owe you).
- Analyse your business plans and providing financial advice.
- Deal with insolvency issues.
- Help you comply with financial policies and regulations.
- Help you implement systems and software that free up your time.
- Spot trends and patterns in your finances that help you make better decisions.
- Provide advice and guidance around cash flow and ensure its protected.
As you can see, it’s not just about crunching numbers and handling taxes (though these are still vital). More and more accountants are becoming business advisors and will help you extract value from your financial data.
How to hire an accountant in 5 steps
The process of finding and hiring an accountant can be intimidating if you’re unsure of what you’re doing. Don’t let this delay you or put you off though. Instead, break it down into these 5 simple steps:
01 Identify your needs
Use the financial cost, your own capabilities, and personal preference to divide responsibilities into what you’d like an accountant to do, and what you’d like to do yourself.
Think back to the scale. If you’re early on your growth journey and worried about compliance, you might just need an accountant to do your taxes.
But if you have a high volume of financial data that could be used to inform key strategic decisions, you might want to hire a firm on a retainer basis.
Another option would be to hire a full-time accountant in-house.
02 Figure out if you need a full-time or part-time accountant
If hiring someone in-house, try to estimate if it should be a full-time or part-time contract. Just be aware that how much work an accountant can do within these hours will vary.
This will depend on the list of responsibilities, the volume of transactions and financial data, and any specialist skills they have.
If you’re outsourcing the work, you’ll find some accountants and firms charge by the hour (though many are switching to value-based pricing), so it’s still worth considering how much time will be needed.
03 Post a job or search for an accounting firm
Once you know what services you need and an approximate amount of time it’ll demand, it’s time to put the word out.
For in-house hires, post some job ads, and use a specialist recruitment company if needed. If you’re unsure about the extent of the support you need, be upfront about it. Otherwise, you’ll create more work for yourself by interviewing candidates who are looking for a different opportunity.
If you’re outsourcing, reach out to your business network and ask for recommendations. Find out who they use, what services they use them for, and whether they would recommend them. If any of your contacts have switched accountants in the past, ask them why they did this and try to get a sense of potential challenges.
Another idea is to use your social network to share the opportunity with hashtags. You’ll likely get responses from people you’re connected to and those you aren’t. Those that make the effort to recommend an accountant they use likely have great relationships.
04 Ask the right interview questions
Whether it’s an in-house or outsource hire, you need to think carefully about what to ask the candidates.
Think about where you need the most help and ask the accountant about similar work they’ve done in the past. It’s helpful if they’ve worked with clients in your industry before too, because they’ll know how your type of business operates and what the common financial difficulties are.
Other questions you might want to include are:
- What software do you use?
- What is your pricing structure?
- What are your specialisms?
- How do you prefer to communicate?
- How often do you run meetings?
Your relationship with an accountant will be one of the most important in your business, so ask any other questions that will give you an idea of how well they’ll fit.
05 Get your accountant on board
Once you’ve chosen the person or firm, you can start the onboarding process.
If it’s a firm, they’ll be the ones leading this and will probably have their own process in place. Each one will do things differently, but all will need access to your business bank accounts and financial records.
Even if they’re owning the onboarding process, you still have a responsibility to make it as smooth as possible. Don’t take too long getting back to them with what they need, as this will only delay how soon they can start work.
If it’s an in-house employee, the onboarding process lies with you, just like any other role. The person will still need access to the accounts and records, but you’ll want to maintain your usual standards and make them feel welcome in the business.
Just like with hiring a firm, you should prioritise getting them what they need so that they can hit the ground running.
When to ask your accountant for help
With your business finances in capable new hands, you’ll finally be able to focus more energy on doing what you love.
But in all business, there will be times where you need some extra guidance that goes beyond the services you initially hired your accountant for.
Here are 9 situations where you should turn to your accountant:
1. Joining a franchise
Franchise owners face a different set of financial challenges compared to standard business owners. The overheads are higher, and you have less freedom around money, but you also get more support with marketing, sales, and supply.
The particulars will depend on the parent franchise and will be agreed as part of a contract. An accountant can help you understand these terms and talk you through the implications of any decision you might make. They’ll also help you learn more about the company’s finances and provide continuous advice on running this type of business.
2. Buying or selling a business
Whether you’re buying a business or acquiring a competitor, getting expert guidance from your accountant is essential. You need someone to investigate the accounts of the company and raise any red flags.
They’ll uncover things like how much debt the company has, what assets it owns, and what exactly it is you’re paying for. They can provide you with guidance on negotiating too.
If you’re selling your business, the buyer will want to do these same investigations. So, you’ll need your accountant to make sure everything is in order.
They can also use the records you’ve kept to position the business in the best possible way when presenting to potential buyers.
During the sales process, they’ll work with the buying company’s accountant to make sure everything is legally above board, and help you structure the deal to leave you with as much money as possible after tax.
3. When you hit a growth spike
Growth happens over time, but it’s not always gradual. Your business might have a sudden spike—maybe you secure a big project, need to quickly recruit a team, or have a product go viral on social media.
Getting help from your accountant here helps you make sure your decisions are financially sound. They’ll also ease the burden of new financial matters that will need attention, such as opening a new office, purchasing materials at volume, or paying more salaries.
This frees you to focus on growth, while also keeping your decisions informed by analysing the new financial picture of your business.
4. When you need to handle legal matters
It’s always a good idea to get expert guidance when trying to comply with regulations. As a business owner, there will be many times that you’ll be legally required to act.
Paying your taxes is an obvious example, but this also includes keeping company records, meeting industry-specific regulations, allocating stock, payroll responsibilities, and more.
Your accountant will be experienced in all these areas and can make sure you’re doing everything right. Not only does this give you peace of mind, but it also minimises the chance of costly fines or legal action.
5. Preparing for an audit
Speaking of legal stuff, having your accountant on stand-by will prepare you for an audit.
Should this ever happen, their role will be to facilitate a tax investigation. Who better to do this than someone who already knows your business inside-out?
Beyond helping you prepare for an audit, your accountant can also make sure you do everything legally required after one, when your business is likely to be closely monitored.
6. Applying for a business loan or overdraft
When trying to borrow a large sum of money, you’ll need to convince the bank that you’ll be able to pay it back. This is where your accountant can help by adding some compelling facts and figures to your application.
Also, if you’re not sure, they can advise you on which is the best source of funding and find a deal that best suits your current financial situation.
Final thoughts
Not every small business needs an accountant. But most would hugely benefit from one.
If you’re spending too much of your valuable time on financial tasks instead of running your business, you run the risk of falling out of love with it.
Leaving your finances in more capable hands will free you to focus on the passion that got you started.
It’s highly likely to be more cost effective than trying to handle things yourself and will give you peace of mind that your business is meeting its legal obligations.
If you’re still not sure whether to hire an accountant, take another look at the scales.
Are you about to reach the tipping point?
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