One of the most significant factors that determines your business success is your accounting setup. Proper accounting allows you to track and manage your business’ revenue and expenses so you have a clear picture of your financial health and performance at any given time. But good accounting takes time, whether it’s the initial setup or ongoing tasks like reviewing financial reports.
When you’re first starting out, it’s entirely possible to do your own accounting. But, as your business grows, you may wonder when it’s time to hire professional accounting services. Here are six signs that can help you know when to hire an accountant.
You’re exhausted from constant multitasking.
Doing your own accounting in the early stages of your business is often quite simple and straightforward. As your business grows and your time is demanded elsewhere, you may find yourself exhausted and less productive as you constantly switch from one task to another. Feeling exhausted from perpetual multitasking is a good sign that you should consider hiring an accounting professional.
To help you understand whether or not you truly need to hire an accountant, assign a cost to each hour you spend managing your business. For example, if you value your time at $100 per hour and spend 5-10 hours per week on accounting and bookkeeping tasks, the weekly cost of doing your own accounting is between $500 and $1000. Once you’ve assigned a cost to your time, it becomes easier to decide which tasks you should be focused on to build your business. If managing your accounting tasks is keeping you from further building your business, it may be time to hire a virtual accountant to help you.
You’re concerned about fraud.
Most business owners regard their accountant as a trustworthy business advisor. Whether in-house or outsourced, a good accountant can advise you on all aspects of your business, including when and who to hire, what services or products are most profitable, and other key insights that will improve your company’s profitability.
Unfortunately, not all accountants are good accountants. As with any other employee, dishonest accountants and bookkeepers can engage in fraud if there are not adequate internal controls in place. Best practices for reducing fraud include separating accounting duties so no one person can do more than one of the following: authorize transactions, record transactions, and keep custody of assets. An outsourced accountant or outsourced accounting firm can be ideal in this case, acting as a neutral third party to ensure objectivity in your accounting.
Accounting data is inaccurate or delayed.
Choosing a great accounting software and properly setting it up is a large part of reducing accounting errors. Good accounting software allows you to link your business accounts and scan receipts, reducing the chance of manual data entry errors. Most accounting software options also integrate very well with Bill.com, letting you automate accounts receivable and accounts payable workflows to stay on top of both invoices and bills each month.
However, as your business grows, you’ll likely find yourself juggling your accounting tasks with other parts of running your business. Juggling accounting with other tasks can cause you to lose focus as you input transactions or review reports, leading to delayed or incorrect accounting information. If your accounting data is regularly inaccurate or delayed, it may be time to consider hiring an accounting professional to help you. Having inaccurate accounting leads to misleading financial statements, which can cause you to overspend or miss vendor payments, make poor decisions and cause serious problems for your company.
Hiring in-house staff doesn’t make sense.
If you’ve already realized that you need help with handling accounting duties, you may consider cross-training or even hiring an employee. But it’s important to make sure that these options make sense for your circumstances.
With the proper approach, cross-training your employees can improve efficiency (and keep costs down) while freeing up time for you to focus on other aspects of business development. It does require training time and identifying the right employee who has shown an aptitude for accounting work and a desire to upskill themselves.
If you’re considering a new hire in-house accountant, this can seem more efficient than outsourcing your accounting, but every new employee comes with additional expenses beyond payroll costs. Besides lowering hiring costs, choosing an outsourced accountant also reduces costs related to ongoing training, benefits and turnover that you’d typically incur with an in-house accountant.
Accounting tools are outdated.
As I mentioned before, accounting is the lifeblood of your business. When handled right, it can help you manage and track your company’s revenue and expenses. With that in mind, your accounting system must be updated to help you maximize the value in time spent on accounting tasks. Business owners often use Excel for their accounting and rely on hundreds of workarounds and manual inputs to track transactions and data. However, thanks to advances in financial technology, there are a number of accounting software options that can help you organize your financial data so it’s understandable and tailored to your business needs.
If you find that your current accounting software is outdated and cumbersome to use, consider upgrading to a cloud accounting software option. If you simply don’t have time to properly use and manage your accounting tools and software, it’s probably time to consider hiring an accounting professional. Their expertise and insight will help you choose and oftentimes set up the accounting software that fits your specific business needs so you don’t pay for features you’ll never use.
Financial reporting is vague or absent.
What if you have good accounting software, but need more actionable financial reporting? This is another sign that you may need to hire an accountant. An accountant can provide insight into what your financial reports actually mean for your business and its long-term profitability.
It’s unfortunately quite common for business owners to feel that their financial reports are useless in clarifying their financial performance. But vague financial reports can also be the result of an accountant who doesn’t truly understand your company’s unique needs and financial goals. If you find this is the case with your accountant, try searching online for accountants in your local area. Changing accountants so you hire someone who truly understands your business will yield better financial performance for your business.
Partnering with the right accountant is key.
Being a team of one is great for the movies, but running your business means at some point, you’ll need help to be successful. Knowing the signs and when to hire an accountant will help you avoid any missteps and ultimately allow you to focus on doing the work you love, while partnering with an accountant who understands and has experience within your industry. Whether you’ve got five employees or 100 employees, having an accountant at your side will provide you with peace of mind and better insight into your company’s financial performance.