According to the Small Business Administration (SBA), 20% of small business fail in the first year. After just five years, that number jumps to a whopping 50%.
If you’re a small business owner whose heart just skipped a beat, don’t worry because there’s more to this story than meets the eye. While it’s true that running a successful business isn’t always easy, it is easy to pinpoint where things go wrong. In the vast majority of cases, cash flow management and financial forecasting are the Achilles heel of today’s small businesses.
Fortunately, there’s a readily available remedy for this problem: accountants for small business. With years of expertise on small business finances, a professional accountant can help you makes it past that elusive five-year mark (and beyond).
Of course, hiring an accountant is easier said than done when you’re a first-time entrepreneur. To explain how accountants for small business can help you find long-term success, we’ve broken things down.
Before diving into the benefits of adding an accountant to your team, let’s start with the basics. Accountants are more than just number crunchers; they are the financial backbone of a business. Accountants ensure that your finances are organized and that your business is compliant by helping with you with:
In short, accountants make sense of the numbers to help you make important decisions. And with an accountant acting as a strategic business advisor and decision-maker, you can spend more time running your company.
It’s clear that the job of an accountant is to tackle the financial side of things, but how does that actually help your business? Below are the top seven ways that accountants can set your small business up for success.
Amidst the chaos of getting your business up and running, setting up a proper accounting system is likely the last thing on your mind. When you hire an accountant during the early stages, you have someone who can find the right software, get the books in order, and set up a proper accounting system from day one. Having things organized early on will save you from major headaches down the line, such as cleaning up the books ahead of tax time or switching payroll systems.
You probably know the saying “if you don’t measure it, you can’t manage it.” This means that if you’re not keeping an eye on your numbers, you can’t properly manage your finances. That’s where an accountant comes in. A good accountant will help you set up measurable business goals and then track your progress. This can include everything from preparing monthly profit and loss reports, to analyzing accounts receivable. Most business owners don’t have hours to spend carrying out in-depth financial analysis, but accountants love nothing more than keeping an eye on the numbers.
You’ve heard it before, but it bears repeating: cash flow can make or break your business. An accountant can help to make sure your expenses never exceed your existing cash by analyzing key reports and spotting red flags. An accountant can also help you prepare for unwelcome surprises, so you’re never caught off guard.
You probably don’t know how the tax rules have changed from year-to-year, but your accountant sure does. With a pulse on the latest rules and regulations, accountants can save you hours pouring over CRA documents to find the most up-to-date information—keeping you compliant year after year.
When December arrives, you’d probably rather spend your time celebrating with friends and family, than closing out the books. By hiring accountants for small business, you can save hours pouring over year-long financial reports. Their review can also shed some light on how to improve your bottom line in the year ahead.
Whether you make small gains over time, or you experience exponential growth, you’ll need an accountant to help you plan for the long-term. Lack of foresight can be the downfall of even the most buzz-worthy businesses. Therefore, it’s important to have the advice of an accountant to plan for and to manage your finances as you grow.
When your business begins growing, you’ll probably turn to lenders or investors to finance the expansion. Even if your business didn’t make much money the previous year, having the records to prove that your company is indeed profitable can give lenders and investors the confidence they need to support your venture. Indeed, it is customary for lenders and investors to request a set of Financial Statements to be prepared by a Licensed Public Accountant. They may also require a Notice to Reader, Review or Audit report accompanied with the Financial Statements—all of which an accountant can assist you with.
Want to find out how accountants for small business can set you up for success? Get in touch with one of the experienced partners at CloudCPA.