Accounting Help for Small Business Explained

You might need an accountant on your team. Here’s how a financial professional can help you reach your business goals with fiscally sound-and legal-practices.

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Writing a business plan

A business plan is an important roadmap showing where your business stands currently and where it’s headed. A business plan includes an executive summary, company description, a market analysis, and an overview of marketing and sales strategies. Another important element of your business plan is a financial plan. This section should include:

  • Income statement
  • Balance sheet
  • Cash flow statement
  • Financial projections

An accountant can help you pull together the financial documents needed to complete your solid business plan. Need help getting started? Read: The Ultimate Guide on How to Start a Business Plan.

Legal structure

Depending on how your small business is structured legally, you’ll face different tax types and rates. For example, corporations are subject to a corporate income tax, LLCs get taxed separately from the owner, and sole proprietorships have personal and business taxes on the same form. Unless you’re well versed in tax law, you may not choose the best structure for your business and unique tax obligations. An accountant with small business experience should know the best structure for your small business.

Software needs

Once your business starts to gain traction, it is crucial to keep your records accurate, organized, and accessible with the best accounting software. A simple spreadsheet just won’t cut it as you expand. The good news is that there is a wide variety of financial software tailored specifically for small businesses. However, do you know the best system? Choosing the wrong software can make billing, payroll, and taxes a nightmare. Get familiar with the types of software available for small businesses here: Choose the Best Accounting Software for Your Small Business. You’ll get an overview of features and pricing and an accountant can help you pinpoint which system is best for you.

Help with finances

Staying on top of your finances is the key to building a successful business. That’s where an accountant comes in. A financial professional can analyze data along with preparing finance reports, budgets, tax returns, and accounting records. Your time is valuable so calculate how many hours financial tasks will take and determine if you could be more efficient with outside help.

Review our blog post, Small Business Finance Management and Basics, to learn about financial basics like gross revenue and net profit. There’s also a sample income statement and a list of documents you’ll need for tax time.

Government paperwork

Filing and filling out government paperwork is never fun. And it can be confusing if you’re not sure of the legal requirements. Here are a few government related tasks an accountant can help with:

  • Applying for an Employer Identification Number (EIN) if applicable
  • Filing taxes
  • Determining which employee forms are required like Form I-9 and Form W-4
  • Calculating and paying applicable business taxes
  • Specific industry requirements (found here)

If you fill out forms incorrectly or past the deadline, you might face costly fines or other penalties.

Audit assistance

A small business audit examines your bookkeeping and tax returns to ensure that both are accurate and legal. You can perform an annual internal audit or the IRS might also audit your company. The best way to prepare for an audit is to have your financial paperwork in order. An accountant who has been through a small business audit can determine the relevant information you’ll need to produce and can help you present it correctly. An accountant can also provide guidance as you move through the audit process.

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Apply for business loans

An accountant can take a global view of your business and assess when is the right time to apply for outside funding and determine the specific amount to borrow. An accountant can also help you with strategies to improve your business and personal credit. The better your scores, the better rates and terms you’ll qualify for.

Having an accountant on board during the loan application process can help improve your chances of getting a loan. Accountants can produce the financial documents required by the lender and make sure your numbers are correct.

For example, if applying for a low-cost SBA loan through a SmartBiz marketplace bank, you’ll need to have the following on hand:

An accountant can also help you determine the right use of funds. Do you need to save money? Refinancing debt with loan proceeds might be the right solution. Are you interested in expanding? Your accountant might suggest a working capital loan.

Company growth

There are many growth transitions a business owner may face when expanding. An accountant can help you through those transitions. Details that need attention might include:

  • Handling payroll as you bring on employees
  • Reviewing property tax or new lease requirements
  • Managing taxes that fluctuate with added revenue
  • Analyzing cash flow
  • Looking at product or service pricing

As you grow, your accounting needs will become more complex. Look at how much of your time is spend on financial tasks. Could you spend those hours on business building projects instead of crunching numbers?

Taking on a franchise

Taking on a franchise is a popular way to start a business. Franchised industries can include auto detailing, cosmetics supply, lawn services, delivery operations, and fast-food restaurants. A franchise lets you be your own boss. By contributing a portion of revenue or equity, the franchise company usually offers marketing, sales, and supply support.

It can be difficult for a new entrepreneur to determine if a particular franchise is the right fit and will help you meet your financial goals. An accountant can review all contracts to find the true costs and revenue expected.

Buying or selling a business

Two business dealing you don’t want to handle alone are buying or selling a small business. In addition to an attorney, you should work closely with an accountant if you’re interested either of these routes. If you’re considering purchasing a business, your accountant can take a deep-dive into the books to assess if the presented financial information is accurate. If selling your business, an accountant can calculate its value with specific formulas that take into consideration assets, earnings, debts, and your overall industry.

Before you hire an accountant

You don’t want just anyone coming on board to handle sensitive company financials. Nothing is better than a personal recommendation from someone you trust so ask friends, family, and other business owners what they think of their accountants.

If you don’t find an accountant who is personally recommended, consider using a hiring platform. Work with one that vets job candidates through background and reference checks or perform your own screening process. Our article, How to Hire an Accountant for Your Small Business, reviews hiring best practices and signs that you need to bring on a financial professional.

Additional resources

Even if you have an accountant from day one, it’s important to stay engaged in the financial dealings of your business. The SmartBiz Small Business Blog has resources you can use to oversee your finances. Check out our feature How to Do Accounting for A Small Business: 8 Top Tips. You’ll learn how to pick a bookkeeping system, track labor costs, create future financial projections, and more.

If you’re handling your finances without an accountant, you can get free or low-cost guidance. Consider working with a SCORE mentor. SCORE volunteers are seasoned entrepreneurs who have experience running a small business. They can help you put systems and process in place to streamline your accounting. If you have a knowledge gap, look into accounting classes at local community colleges or online.

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