For startup Businesses and the owners, the most important factor is to maintain the Finance of the same and exempt extravagency. As a strong Financial base is required for a business to be set and get started with, any new Business owner tries to escape from unnecessary expenses and thus they believe that hiring an Accountant during the startup of the Business is an extravagance and would lead losses. The Startup owners and freelancers believes that they themselves keep the required knowledge for how to fill out and complete the related paperwork.
But, the Reality is somewhat different and not hiring an accountant could be proved to be an expensive mistake.
In startup Businesses the Accountant is not just beneficial for filling out and filing forms but they serve manifold as they could impart duties like providing expert advice and information whenever required thus helping the business to grow, their advice could help prevent running short of IRS thus saving thousands of Dollars in taxes.
Benefits of Business Accountant in a Small Business
Here we would be discussing about the range of benefits a Business accountant offers to any startup business. As we have already discussed, that they don’t just take all the burden of the paperwork and balancing the Books but also benefit in several other ways which we would be discussing below:
#1. Time saviour
For a Business owner time is money and hiring an Accountant fetches a lots of time for you in which you could make better plannings in the Business context. He also acts as an advisor and could save your losses. There is a thumb rule through which a businessman could compare his hourly rate to the cost of an accountant.
Quoting an example would make thing clear:
Say if a startup Businessman charges $100 per hour and his Accountant charges a Flat fee of $100 per month, so the $100 per month paid to the Accountant is worth spent because it is obvious that the businessman could not complete the monthly Accounting task in a single hour.
Remembering the tax deadline for an employee is easier as it is just one date, i.e. April 15th, but for a Freelancer the taxes are required to be filed quarterly; on 15th of April, June, September, and January of the previous tax year. Thus apart from keeping the track of deadlines of the clients, many deadlines are required to be taken concern of and any miss on these dates would lead to fines and penalties charged by IRS. Any such miss in deadlines could charge penalties and fines and would raise a question that whether such losses are affordable. If the Answer is no then, an Accountant is worth an expense for your startup business.
#2. The Accountant would be a valuable source of information
Keeping in mind that Businesses are job creators, the American tax code has been setup to help Businesses grow. After creating a Business entity, the tax benefits could not be reaped without understanding the tax code. Understanding the Tax code one is not enough as they keep on changing in a year or so thus, keeping self updated is the must. The accountant understands the tax code and keeps himself updated to the changes and would ensure to provide you with the utmost benefits.
#3. An Accountant is a trusted advisor
It is extremely difficult to keep a track of the Personal expenses but your Accountant could help you keep seperate track of personal and business expenses. If both the Personal and Business expenses are mashed up, the IRS deals harsh with such business owners. Meshing the two would attract an audit and the penalty is that you have to prove the separate expenses
#4. Helpful in growing your business
Business growth is the ultimate target for all the Business owners. The Accounts shows the actual face of the Business and gives objective advice on the best ways for how it could be grown. The Accountant also helps in hiring employees as per the business requirements. Be assists in clarifying the skill set required for the stipulated designation.
Other areas where an Accountant’s presence is worth
Below are the areas discussed where an Accountant could be proved to be helpful apart from Account keeping. An Account could provide a range of services apart from balancing of books which could boost up a startup business. Below we would be discussing some of them:
- Business incorporation
The Account hired for your business knows the ins and outs of it and also he understands what is the present requirement of the Business. Amongst An LLC, an S-Corp, a C-Corp he understands what would be the best for the business and would recommend the same. Collectively he knows and understands your business objectives, finances, and circumstances to recommend the most beneficial measures. The Accountants considers your business and its requirements as their duty to be fulfilled. Thus, they keep a track for whether the Client has filled the forms correctly
Accountants works such that they make sure that their client has filled out the forms correctly and also more often they file the forms for their clients’ behalf. This is an additional help to the business because the Incorrectly filled out or filed incorporation papers could lead to unnecessary delays in adhere to turn the Tax benefits towards their clients.
- Quarterly taxes
Here you need to pay estimated taxes on quarterly basis.
The procedure is such that for the calculation of federal quarterly estimated tax payments you need to make an estimate of your adjusted gross income, taxable income, taxes, deductions, and credits for the calendar year. Preparing the detailed information and gathering the required information is not an easy task and submitting the same needs confidence on accuracy which is not so easy. But with the assistance of an account manager it becomes easy.
- Business deductions
The Account manager keeps the adequate knowledge regarding the deductions. Like suppose you have a home office is is necessary for you to know that for a home office, for the deduction to be legitimate, it should fulfill all the requirements as defined in the IRS’s definition of “exclusive and regular use”. Thus, in case if you have a home office and you use your home office as a guest room, you are not liable to take the full home office deduction. These are some minute things which shows the worth of these accountants.
- Financial reports
It is the Business accountant who could provide you with account reports from time to time throughout the year which would be proved to be beneficial in monitoring the financial progress of the business and the Business owner could make the required adjustments timely. As review done at the year-end brings possibility of inaccuracy as the businessman would be unaware of things like outstanding invoices at the time they happened. Making adjustments and chasing money nine months late is much problematic than balancing and casing money one month late.
- Paying salaries
The Business Owner thinks of paying salary to himself once the business starts bringing profitability to him. He could also arrange a draw for himself once the business comes in profitability, based on the structure of the business.
Payment to self would require withholdings for Social Security, Medicare, federal income taxes, and state income taxes if the locale requires them. This would complicate the taxation but the accountant could take the businessman out of this and could make way for you.
What all should be considered while hiring an Accountant
Thus, from the above discussion we come to know that how the Business accountants are important for the startup businesses. But the other important factor is “ How could we find a qualified Business Accountant”.
The most beneficial is ‘Personal recommendation’. If you are associated to any professional organization, the fellow members there could help you find out a good accountant as they are well informed of the accounting needs of the fellow freelancers and small business owners. Some research work would also do.
Check their experience
A good businessman should not trust an unqualified accountant to handle over their business. Thus before giving the wholesome responsibility of your business to an Accountant make sure he is qualified through one of the main accountancy bodies like the Association of Chartered Certified Accountants (ACCA), he Institute of Chartered Accountants (ICAEW or ICAS) or the Chartered Institute of Management Accountants (CIMA). It is also important and necessary to check that whether the Accountant has a backup which he could make you available at the time of his absence. Also, access to specialist advisor is required.
Find a proactive accountant
A Good accountant plays the role of a partner in the Business. The provide adequate support to your business throughout the year and not just at the taxation time. In case of a small business, partnering a good Business accountant is profit at par. A proactive accountant as a partner could only save a small business and could help the business owner to avail advantage of all possible tax savings.
Insist on a fixed fee
All the Business related questions would be answered by the Business Accountant. It is to be noted and made sure to hire an Accountant on the basis of fixed fee arrangement which would exempt you from receiving a ten page itemized bill.
It should be known to the Business owner that what all services are available under this arrangement.
Build a relationship
A freelancer or a small business owner generally feels comfortable conducting business online and there are accounting firms that offer their services only online. Hiring such accountancy for your business is not the best approach.
Also, there must be an online website development firm, one would i suggest like CA Portal preparing chartered accountant website helping them to expand their business and getting them clients from across the geographical boundaries. They can have active chartered accountant portal from where they can handle their clients with ease by sending them messages, notifications and make them aware of any upcoming liability.
Getting along well with the Account would definitely become the key to success for your business. As you and the accountant as well could easily discuss the requirement of the business, the changes and measures which should be taken to excel the business. A good relationship with the Accountant is the must because you could easily and comfortably discuss the current position of the business. The Business accountant should be trustworthy and you should be comfortable with him.
Thus, through this article we made it clear that how a Business Accountant is beneficial for the startup business owners to help and assist them in getting established in the Business world. A business Accountant is a good investment for a startup business.