If you run a business, delegating your tasks ensures efficient business operations.
One of the primary business tasks is financial management. For financial tasks, you may consider the need to hire an accountant.
An accountant is the best person to manage the different financial tasks that your business requires, but when should you actually reach out to find an accountant?
This comprehensive guide will help you decide when to hire an accountant.
1. Writing Your Business Plan
When you’re writing your business plan, you ought to consider whether you have the funds for your planned initiatives.
For this, you’ll want to consult an accountant. They will be able to determine the ideal budget for each initiative and project you wish to undertake. They can look at your cash flow to determine whether you will likely have the funds for these projects.
However, an accountant may not be enough. You may also need a bookkeeper as a helping hand for writing your business plan. This article by Alliance Accounting discusses the difference between an accountant and a bookkeeper, but you may need both for this instance.
2. Your Company’s Legal Structure
When it comes to determining your company’s legal structure, you may want to consult an accountant to determine the best legal structure for you.
An accountant understands the different financial obligations that come with a sole-proprietorship, a limited liability company, an S corporation, and so on. They will look at the nature of your business to help you decide on what is the best legal structure for your company.
They can also help you with your company’s tax obligations and complete the necessary paperwork required by the legal structure.
3. Assessing Your Company’s Finances
You want to always keep an eye on your company’s finances. You need to keep track of accounts payable and receivable. You need to look at cash flow, revenue, profits, losses, and expenses.
This is easier said than done, though. As your business progresses, you will find that keeping records of your company’s finances can be a strenuous task.
When you find that you are having difficulty determining your company’s finances and remembering what’s on the books offhand, then you should hire an accountant. An accountant will be meticulous with every penny that enters and leaves your company. They will have a greater understanding of your company’s finances than anyone else in the organization.
4. Dealing with Legal Obligations
Whenever you have to deal with legal financial obligations, it’s always preferable to have an accountant by your side. If you are being audited by the IRS, for instance, it’s always better to have your accountant look at your financial records and help dispute or resolve any potential issues.
An accountant will also be aware of any upcoming tax deadlines and will understand how to use the tax laws to the best advantage of your company. They can help with legally avoiding taxes, receiving tax credits, and tax refunds.
5. When You Want to Increase Cash Flow
An important aspect of running a business is ensuring that you always have a steady cash flow. You want to make sure there is always an adequate amount of funds coming into your company’s bank account.
Your accountant will always keep an eye on your company’s finances. They will know how to cut costs and whether further expenses are feasible. They can advise on actions your company can take to increase revenue and profits. This, in turn, will help your company increase its cash flow.
An accountant will also continue to analyze the rate of your cash flow per month (or other duration). This will help them determine whether your cash flow has been rising, is stagnant, or is stagnating.
6. When Applying for a Loan
There might be a time when your company will need to apply for a bank loan. Banks will only give a company a loan if they feel assured that it will indeed pay them back. As a result, your company needs to make a strong case on why a loan should be granted.
Your accountant can help present your case. By looking at your company’s financial records, they will be able to create reports (including graphs and charts) that show how your company has been fiscally responsible, generates revenue and profits, and has a steady cash flow.
An accountant will have experience in speaking to bank officers and convincing them to grant your company a loan. If you need a loan, don’t go in there by yourself, have your accountant by your side.
7. When Selling Your Business
If you decide to sell your business, you will definitely need your accountant by your side – if you didn’t have one already. Your accountant will prepare the necessary financial documents and reports needed to sell the business.
These reports can be used to show your company in a good light and emphasize your company’s profits and upward trajectory.
When negotiating with a potential buyer, there will likely be legal requirements such as due diligence. Your accountant will help you with these procedures. If your business does sell, your accountant will also help you file the necessary paperwork and meet the tax obligations that are required.
Reach out and Hire an Accountant!
Now that you know when to hire an accountant, you can clearly see that they are central to the success of your company. We suggest that you reach out to an accountant and find the best one for your company’s needs.
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