For many small and growing businesses, professional accountants are usually requested only when the need arises. Due to the costs involved, hiring one falls as the last option to many entrepreneurs. Most resort to multitasking and resolving things on their own, without realizing that the attempts to save money have already led to losses from failing to generate revenue.
Each business owner has their reasons on when to hire an accountant. If you want to know the various grounds for getting one, read through this article and find out how you can benefit from getting a professional accountant other than just requesting tax-related services.
The Difference Between a Bookkeeper and a Certified Public Accountant (CPA) or Chartered Accountant (CA)
Before we even discuss the different objectives of hiring an accountant, let’s first set a common understanding of the difference between these two professionals.
Oftentimes, the term “bookkeeper” is confused with an individual who is a CPA. A bookkeeper and a CPA both deal with the financial transactions of a company. However, there is a big difference in their skills, education, training, and experience.
The bookkeeper acts as a first base in managing the accounts, they make sure that everything is accurate and up-to-date. Bookkeepers acquire a general knowledge of accounting and business principles through earning a college degree or relevant experience alone. They do not need certification or licenses, therefore there can be a limited job environment for bookkeepers compared to a Certified Public Accountant or a Chartered Accountant.
CPAs or CAs, on the other hand, consolidate what has been collected by a bookkeeper. They’re also able to generate in-depth reports, analyze and interpret them. Accountants possess a higher skillset, with strong educational background focusing mainly on accountancy. They may also need to take specialized exams before they are allowed to use the title of CPA or CA.
In Singapore, the current governing body is Chartered Accountants of Singapore and certified accountants are known as Chartered Accountants Singapore.
When Should You Hire an Accountant?
Now that we’ve drawn a clear line between a bookkeeper and an accountant, let’s find out the different circumstances that make a business owner hire an accountant.
- When launching a business.
If you want your business to start smoothly, seeking professional guidance is one way to do it. On top of business registration, there can be accounting and tax requirements that need to be fulfilled. With a CA’s direction, you can maximize your tax benefits by knowing which type of legal entity should you register such as a limited liability company or a sole proprietorship.
By hiring an accountant early on, you can confidently proceed with running your business under a secure business financial plan. And since most fresh entrepreneurs choose to initially deal with their daily bookkeeping tasks, accountants can recommend you good software options that can help automate transactions.
We understand that sometimes its may be costly to hire a full time or even a part time accountant at the start of launching a business, hence, what a lot of entrepreneurs will do is to outsource their bookkeeping and accounting work as professional firms have fully qualified personnel to provide their expertise at a fraction of the costs.
- When requiring financial planning and analysis.
The role of accounting in business is so diverse that it extends to more than just tracking income and expenditures, its significance is well applauded when it comes to financial planning and analysis.
Accountants are bestowed with the ability to gain financial insights and determine a wise financial decision. Thinking of franchising a business you think is profitable? No problem! With the use of reliable data from your statements and reports, an accountant can help you review them and draw out an evaluation so you can achieve your business goals.
- When in need of regular adjustments to your business operations.
Depending on the nature of the business, the systems, trends, costs, and revenue can be dynamic. To ensure efficiency, hiring a professional will help improve the current procedures so your team can keep up with the changes and continually adapt to new streamlined systems.
Making sure that all systems are working for everyone’s advantage is important. Removing hurdles in your business processes will help keep things running smoothly.
- When planning for a loan.
Approaching financial institutions for funding can be difficult especially for those who are still starting. With limited credit history, acquiring that much-needed grant is extra challenging.
But with the assistance of an accountant, your application can be backed with facts and figures to support your business eligibility. You can also be introduced to the different ways of building business credit and other forms of loan. Accountants can also help you decide which loan to pursue based on the interest rates, terms and conditions.
- When business is growing rapidly.
A rapidly growing business means more staff to hire, utility bills to settle, and new office space to set up. For you to accommodate all the quick developments and transformations, an accountant can inspect your cash flow, inventory processes, and pricing. Allowing an extra person to take off part of the load will help you focus on the direction to where your business is heading.
- When planning to sell your business.
Wondering how does accounting help a business during a sell up? Hiring an accountant can help you put your business in a favorable position making it easier to close a deal with your prospective buyers. The CPA can help you translate the numbers out from your financial reports and produce a winning presentation that will encourage potential investors.
Once the deal is closed, the accountant can also give an advice about the best payment structure you can put in place and reduce the burden of paying huge taxes.
- When your company needs to be audited.
Avoid putting yourself in an extremely stressful situation. Although it’s unlikely for governments to conduct audits due to the huge number of existing businesses, making sure that you’ve been reporting the right amount of tax correctly is essential.
Ideally, you should not wait for the government to perform an audit before you get the help of a professional. However, if you find yourself in this situation, you definitely need to get an accountant. This way, you can explore how to go about the process and avoid any violation.
- When the accounting work is causing you stress
When starting as a small business, it’s normal for many entrepreneurs to manage things on their own, including the financial side. It could feel empowering for being able to do these things while running the business. But, it can also increasingly become overwhelming, and this can negatively impact your career and personal life.
So if you’re starting to feel being overpowered by stress and the high volume of work, it’s time to consider delegating the financial aspects of the business and concentrate more on growth. For you to confidently move forward to this objective, hire a trustworthy accountant that will promote your confidence in delegating the tasks that you used to do.
Finding the Right Accountant for Your Business
Whether you decide to get an accountant part-time for some critical tasks or full-time for all the necessary business-related financial activities, getting a commendable accountant is important. To search for a stellar CPA, contact your fellow business owners and ask for recommendations.
You can also look online through trusted job sites and check their employment history and reviews. Generate a shortlist, see their qualifications and credentials, and meet them so you’ll see if you are comfortable working with the person. You might also want to look into their fees, specialization, and prerequisites that they might have.
The role of accounting in society is indispensable. By keeping track and handling corporate finances appropriately, businesses can continue to grow, thereby providing jobs to the community and contributing to the economy. This alone proves the importance of hiring an accountant right from the beginning of your business. When there’s budget constraints, the next best solution will be to outsource your bookkeeping and accounting needs to a professional firm.