Does every small business need an accountant?
If you are a small business owner, do you really need an accountant or can you do your own accounting? Will you struggle without one?
Of course, SME's will struggle without one. 95% of SME's fail through lack of expertise, resources, skills and time in their business. You should be proactive in business and know how it is performing at any given time so you can make the most educated decisions, avoid any curve balls thrown at your business and best of all, enjoy your business with peace of mind it is well looked after. The strategic value of an accountant is more than bean counting and reports, taxes etc, they should be your business advisor, your negotiator, your cash flow manager, your business planner, your right hand man/woman who you can trust the most and sound out your thoughts. Your accountant does need to be full time, it depends on the size & nature of your business and transactional volume. A bookkeeper can handle all this transactional processing and keep on top of it. The more it piles up the more complex and costly it becomes for your accountant to clean it up and get it back on track, maintenance is the key to a well oiled machine. A value of a good accountant should far outweigh their cost to your business. They should save you money and make you more efficient.
My mobileCFO is all about that, offering SME's a flexible, affordable solution when you need it, for how long you need me, onsite or via virtual cloud, we will always be in contact 24/7 when you need me. Most SME's can't afford a CFO level experienced accountant from the corporate world so even part-time, flexible access to one will be much more operational value to your business than a full time bookkeeper or expensive external accountant. I am your internal partner, your friend and trusted resources in business. I focus on your vision, big picture & simply and plans things for you with structure to make things easier for your business.
I have seen many SME's skimp on the use of an accountant and they are ones that call for urgent help when their business cops a blow or goes belly up. Your business needs protection whilst it grows...
Every business owner should have access to the skills and knowledge of an accountant to help their business. If you are luck enough to be one (yep, it's great to be one!) then you may not need an "external" accountant. Any you may have a great bookkeeper which can reduce what you NEED from your accountant, but any business that is a serious business should talk to an accountant about the services an accountant can provide to help a business grow profit, manage cash, protect assets, save tax and package their business for sale.
Unfortunately, yes any serious business will have and need an accountant to deal with their compliance matters. Tax rules and regulations are constantly changing and even we boring accountants struggle to keep up. Getting things wrong can cost thousands in additional tax and sometimes you will not even know it is costing you money unless you talk to someone who knows.
However, in today's business environment your accountant should be a lot more than a number cruncher. The reality is that most Australian accountants concentrate on Tax and they have been programmed to do just that.
If you have an accountant that says they are tax experts or they have 30 or 50 years of experience be a bit vary. As a client you would expect every accountant to know tax rules and be experts. If you think about it when you visit your doctor does he/ she tell you that they are a good doctor - you just expect them to be. In the same way you should expect your accountant to know what they doing.
What you want in an accountant is someone who can give you more. They should be able to give strategic planning advice, facilitate strategy days, work out what your business and personal goals are, talk to you about retirement and estate planning just to name a few.
I believe yes, every small business needs an accountant in some form or other. Note, however, that this might be as minimal as a few hours per month, or as much as a full-time accountant. The ‘right answer’ depends on your business specifics.
For example, the more complex your business, the greater the value you’ll find in employing an accountant to provide clarity around the financials, as well as manage compliance and stakeholders.
We deal a lot with startups and SMEs and these kinds of businesses are, understandably, more concerned with developing their product/ service and business operations than having their accounts in order. At the same time, having organised finances is a critical component of a successful business particularly if you want a tax-effective business or to impress investors.
You need an accountant to understand your business, ensure you’re meeting legal and regulatory obligations, and maximising efficiencies. As with our approach to many aspects of business, we recommend going after the best quality you can afford because it pays off in the long run. This applies to accountants too.
Mainly for one little problem.... tax.
Most accountants, especially of the CA variety, love tax. In fact, they get off on it. And tax laws can be complex and they're always changing. So business owners shouldn't waste time trying to stay on top of them. Find an accountant you can trust and then rely on them to get your tax compliance sorted.
For most accountants that's pretty much all they do: TAX.
But there are other accountants out there who'll look at your whole business. They can help you implement IT systems that'll make your small business simpler and easier and less stressful and they also look at your personal financial situation and your own goals and objectives and help you work towards them, not just give you a dirty big tax bill at the end of every year.
Sadly, in my extensive experience working with small businesses on their financial systems, I find that accountants often do not add a great deal of value where it counts. Small businesses don't have a lot of free capital, and for what they can afford to spend on accountants they are often only getting the very minimum of advice and are otherwise "supported" by inexperienced juniors with little or no "on the ground" experience. It is the hands on stuff that businesses owners need help with, to guide them through the day to day business activities which will ultimately make or break them.
Also, and again I say this from a position of much experience, accountants often differ in what they deem to be the "right" thing to do, how a business should be structured for tax purposes, etc. There are a lot of mixed messages out there, and it is a real minefield.
My answer is "No", not ALL SME businesses need an accountant. If you have a good relationship with a business advisor or bookkeeper who has a solid understanding of business accounting processes at the coal face, coupled with a sound understanding of what is required by law, day to day compliance accounts can be easily prepared by them, as can the end of year returns.
With that said, a GOOD Accountant is worth their weight in gold!! The hard part is knowing which are the good ones... I have seen some real horror stories in my time, where the business owner has been charged thousands of dollars for horrendously inaccurate accounts. All accountants have a disclaimer of liability, so who is ultimately to blame when that happens...? Again, it is a minefield.
I think there should be more governance around setting up a business. Perhaps some sort of qualification criteria, such as a business plan, a certain amount of working capital and proof of relevant background experience. This might be a more effective method of safeguarding the small business owner (protecting them from themselves, if you will!) and reducing the huge number of small business failures. It may also provide some sort of protection to others who are transacting with that business in the market.
Wow, some good answers here. My view is very simple: get the best accountant you can afford and tell him or her up front that you expect them to be cost neutral. There are so many ways a good accountant can add value to your business and save money with the best leasing, borrowing, tax, government grants advice and more.
Agree on an annual budget to be billed monthly rather than at year end so as to fit in with your cash flows.
Use your accountant as an important team member but check their performance. If they are costing you money, question why?
If one has absolutely zero understanding of accounting, then I would say yes or at least have access to one for advice. Book keeping is one thing but tax, superannuation laws etc are forever changing. It's impossible for a small business owner to keep up to date or even understand the changes. The last thing one needs is to make a monumental error, such as going out and buying a $250k car, thinking one can depreciate the heck out of it to reduce their income (I know of one personally). It can be very costly to make these errors unknowningly. This is where accountants can save you lots of money and headache.
Any business regardless of size needs an accountant and not just a bookkeeper. A good Accountant doesn't just get off on tax as some would have it but rather they are your business partner to success. They provide a great sounding board, cash flow management, business transformation strategies, can negotiate on your behalf, provide suggested software and It solutions and they will provide a considered measured assistance when youv'e made a mistake because you didn't use one.