5 Signs You Need to Hire an Accountant

You’re a business owner who knows the basics about how to account for income and expenses, but you’re not sure if it’s time to let someone else count the beans. That’s when you ask yourself: how do I know if this is the right time to hire an accountant?

Here are 5 signs that you should let an accountant handle your books.

1. You Don’t Know Much About Accounting

If you don’t know the difference between the cash flow statement and the balance sheet, then you’re a good candidate for someone who needs a professional accountant. Similarly, if you have no idea how to calculate depreciation, or the difference between a capitalized expense and fully deductible expense, it’s probably best if you let someone else handle the accounting for your business.

As your business grows, proper financial accounting will become more and more important. If you have any aspirations to go public, proper accounting is mandatory.

2. You Don’t Know How to Minimize Your Tax Bite

There are perfectly legal ways to count your income and expenses so as to minimize the amount of taxes you’ll owe to the federal government. If you’re unfamiliar with how to do that, then a professional accountant can actually save you money, even after the cost of his or her fees.

The fact of the matter is that professional accountants make it a habit to keep on top of the latest changes in tax laws. They also know about 1099 rules and which states are tax free states. All of that can work to your advantage.

If you don’t know how to maximize your tax benefits, hire an accountant.

3. You Can’t Focus on the Mission of Your Business

Unless you’re an accountant, you probably didn’t go into business so that you could spend a significant chunk of your time updating your ledger. Yet, you might have so many income and expense items right now that it’s impossible to devote the time that you want to your business.

If that’s the case, then you have an excellent reason to hire an accountant.

4. You’re Facing an Audit

Uncle Sam can be a cruel enemy. If the IRS is under the impression that you’re not paying your fair share in taxes, then you could be subject to an audit. When that happens, your life will change dramatically, and not for the better.

At that point, it’s best to get some professional help with your books so that you can retain some level of sanity. Hire an accountant to report your finances to the IRS and you’ll likely find that the tax collection agency will give added credibility to your numbers.

5. You’re Growing at a Rapid Rate

The good news is you’re growing rapidly. That bad news is that money is coming in and going out at such a rapid rate it’s hard to tell what’s really happening.

That’s a great time to hire an account. That way, you can manage the growth while the accountant manages the books.

You might be very good with numbers, but that doesn’t necessarily mean you’re a great accountant. If you find that the task of managing your books is too much to handle, seek professional assistance.