Tuesday, December 23, 2014

Do you need an accountant and how do you find one?

Do you need an accountant?
In today’s day and age, with the multitude of good accounting and tax software available, most business owners will be tempted to pass on hiring an accountant. After all what is the point in hiring a resource when the software can do all that. So is it a good idea?

It really depends on the size and complexity of your business but more often than not,, having a great accountant is one of the best investment s in your business. Business owner’s should view an accountant as more than a resource. They can become an integral part of your business.

Why? According to the SBA, one out of three businesses that go bankrupt cites failures in its financial structure for its demise. Plenty of shattered businesses have cut corners, by deciding to do away with having an accountant, only to find they were operating at a loss and not at a profit.

Accountants don’t just maintain the books and file taxes. Many are qualified to offer insight into the financial statements that a software can’t. They can so to say read between the lines and identify the dangers that are lurking in the background and help business owners prepare for such eventualities. The best ones can offer you advice about your operations and potential for growth by accurately analyzing your financial data. Their knowledge of legal tax deductions for which you are eligible often pays for itself.

So tighten your belt on other parts of the business but don’t cut corners when keeping your financial house in order.

Should you hire a bookkeeper or Accountant?

In simplest terms, a bookkeeper records financial transactions and an accountant analyzes those transactions. So the next question that you as a business owner may have is “I need both?”. Unless you are a numbers whiz or want to spend much of your time crunching your business’s numbers, it’s wise to outsource these functions.  If your business is complicated or if you have a complex business structure, chances are you may want a Certified Public Accountant. To keep businesses costs low, consider hiring a bookkeeper to do your monthly expenses and use a Certified Public Accountant for your taxes, planning and compliance with government regulations. Even better, these days there are a number of firms that can offer you the best of both. These firms offer bookkeeping and CPA services all under one roof. This helps business owners as they have to deal with only one firm or person.

Many business owners will admit that they have neither the skills, experience or time to do their own books and taxes and are happy to turn it over to the professionals. Another benefit to hiring a seasoned accountant is that he or she can represent you if you are audited. Often a CPA can resolve issues with an agent much more effectively than a business owner who is tax code savvy.

How do you find the right accountant?

Handing over the financial reins of your business to an outsider is a scary proposition. After all they would have access to all the confidential data of your business and in many cases your personal data as well. So make sure you have a foundation of trust and open communication. If you are in the market for an accountant, get referrals from other small business owners or local professional associations. Here are several ways to keep costs down:

·         Consider going with a smaller local firm or an individual which often is less expensive than a large accounting firm. Be sure to check references and know their credentials and experience, especially in your industry.

·         Ask about their pricing structure. Many accountants charge on an hourly basis. This is good if your books are in good shape. Otherwise a monthly retainer model may be more beneficial for you.

·         Use your accountant wisely and leverage their experience and expertise. Get advice on your business’ financial or operational performance. A good accountant should also be looped in prior to you making a big business decision. Their advice can help you avoid costly financial mistakes.

Compliments of VXL Services, a Business Consulting Services Company that provide Accounting, Tax, Payroll, Consulting and Company Incorporation Services to Start ups, Small and Medium Sized companies across US. If you have any questions please contact Prakash Iyer, CPA  at (732) 983 – 4150 or visit us at www.vxlservices.com for all the various Business Packages that we have to offer.