It's very likely that when you started your business, bookkeeping and accounting were quite simple and straightforward. Your income and expenses were logged into a software program and little else was necessary. However, as businesses grow, the number of transactions to track is likely to have increased making the job more labouring and time consuming. As a result of this, there are several technical and financial questions without obvious answers.
However, one thing is clear, you don't want this lack of knowledge o lead to legal issues and certainly you don't want to put yourself at risk of an audit. The following are the signs to look for, if you're beginning to think the time has come to bring in a professional.
You Don’t Have Time to do the Stuff that is Important to You
When you began your own business, you did so because you had a dream, a passion and a vision for the work you would be doing. However, if you are instead finding yourself spending all your time on bookkeeping and not enough on the work you enjoy, or ways to bring in new business, then it's time to delegate to a professional. After all, if you had wanted to be an accountant or bookkeeper then you would have pursued that career.
Your Business Has Grown Beyond Your Capacity to Manage Its Financial Aspects
If you are in this position, firstly, congratulations! But the reality is that once revenue increases and the business is able to expand, the financial obligations increase along with it. There are more customers to account for, more equipment to invest in, more employees on payroll and more vendors to pay. With all of these things to consider, things can become complicated very quickly. On top of this, some tax requirements may change.
You’re Bringing in More Money But Can’t Find the Profits to go With It
This is a serious warning sign and ignoring it is a huge mistake. There are several common mistakes that can cause increase revenue to not lead to increased profitability and a seasoned accountant is the one who is best suited to help find which you are making. They will quickly assess the situation and suggest adjustments to be made that can put you on the right path. For example, it may be that your overhead is too high and you need to cut costs.
You’re Starting to Realize How Little You Know About Accounting
It was easy, when you were new and needn't worry about anything beyond your income and expenses. However, when you're now being asked to both read and prepare financial statements or a clients wants a report prepared which is beyond your capability. If are starting to find terms you are unfamiliar more and more, this may put you at a disadvantage, then it may be time to bring in an accountant. Even if it's simply to explain the meanings and give you a solid footing to move forward.
It’s Tax Time and You’re Feeling Very Vulnerable
The tax requirements can be difficult to navigate and can be quite overwhelming. Making any costly mistakes in these stages can lead to receiving possibly harsh penalties. To avoid both this and ensure you take advantage of any possible deductions or write offs you're entitled to, it is advised to work with an accountant. Understanding these guidelines is their profession, therefore you should take advantage of their extensive knowledge.
You Need to Prepare a Report for Investors in Your Business
Whether it be individuals or institutions that are either invested in or seeking investment in your company, you may be asked for financial reports, in order to provide information about your businesses health. A financial report is a snapshot of a business, and within it what is going well and what needs improvement. This is the document you will most likely to be asked to produce. Having an accountant prepare these not only assists you with the task but in doing this preempts any possible problems regarding improper practices and/or compliance issues.
You Work in an Industry that has Specific Regulatory Requirements
It's enough responsibility just running a growing business, but adding on government compliance and regulatory requirements specific to your industry adds another layer of difficulty. Accountants can shoulder this burden, often involving preparing documents, keeping appropriate records and fulfilling these obligations in an appropriate and timely fashion,
You’ve Received Notice of an Impending Audit
Few things can create an instant sense of anxiety and fear, but receiving an audit notice is one of them. However, working with a professional can quickly reduce these fears. An accountant will put your mind at rest as thy go through records, assess any issues to be addressed and help prepare the necessary documentation.
You’re Contemplating Selling or Expanding Your Business, or Buying or Selling Property
Selling or adding to your business, as well as buying or selling business related property can lead to large tax ramifications and unnecessary expenses if not properly structured and accounted for. Going through this process with the guidance of an accountant ensures you are approaching the issue knowing all your options, including both advantages and disadvantages of each.