Recognising the Signs: When Should Your Business Hire a Professional Accountant?

During a business’s infancy, its team members, particularly the founder, often find themselves assuming diverse roles. One moment, they are the CEO, the next, they’re juggling tasks typically handled by an administrative assistant, salesperson, accountant, or even an intern. This is all based on the evolving needs of the enterprise. 

While such multitasking can be manageable at the outset, it becomes increasingly impractical as the business expands. Tasks like tax preparation and financial planning become significantly more complex and demanding, particularly in industries subject to rigorous regulatory and compliance standards. 

Consequently, there comes a point in the growth of every business when hiring an accountant becomes indispensable. So, how can you identify the right time to engage an accountant? The key lies in recognising the indicators.

CEOs must hire the services of companies like Walker Hill if they need to build a more robust accounting and finance department. However, before getting into that decision-making process, it’s essential to identify signs that your business may need an accountant.

Key Indicators That Your Business Needs a Professional Accountant

Below are some of the critical signs that your business has inevitably grown to the point that it requires an accountant’s services:

Time Spent on Bookkeeping Is Consuming a Large Portion of Your Business Hours

As an entrepreneur, your time is a scarce and valuable asset. With the growth of your business, managing numerous operations single-handedly becomes not only impractical but also financially unreasonable. Directing your expertise and energy towards tasks that are not a core part of your competencies can hamper the performance and growth of your business. As revenue increases, transactions become more nuanced, demanding precise knowledge and understanding. 

Consider the vast array of responsibilities a professional accountant can manage, which currently might be consuming a significant chunk of your weekly business hours. These tasks include maintaining the general ledger or chart of accounts, overseeing daily transactions, preparing and analysing financial statements, performing cost accounting and variance analysis, managing treasury and cash, including bank reconciliations, and handling payroll and fixed asset accounting. 

If you find yourself lacking the time or expertise to efficiently tackle these diverse accounting activities, it may signal the need for a professional accountant. The growth of your business hinges on the ability to leverage economies of scale and specialisation effectively. 

Ultimately, it becomes crucial for you to have the freedom to concentrate on what you do best—growing the business. If this freedom is compromised, it could potentially stagnate your venture’s growth trajectory.

Navigating Tax Season has Become Overwhelmingly Complex

Significant tax refunds or considerable owed back taxes are clear indications of potential inaccuracies in your business tax management. Tax seasons often evoke stress and apprehension, even amongst seasoned professionals well-versed in the complexities of tax laws and regulations. As a business owner responsible for your financial accuracy, such periods could be daunting, leaving you feeling overwhelmed and out of your depth. 

The repercussions of a single error can be severe, landing you on the wrong side of the Internal Revenue Service (IRS). Innocent oversights could lead to penalties, while a lack of understanding could result in missed opportunities to minimize your tax liabilities through deductions or business credits. 

Employing a professional accountant can alleviate these stressors, offering services such as tax planning, personal financial planning, tax compilation and submission, and filing necessary financial documents to the IRS. They can also ensure you reap the maximum benefits from your deductions and credits, thereby optimising your financial management.

Anticipating Expansion to Other Cities

In Australia, tax regulations and compliance requirements differ depending on the cities in which your business operates. If you’re considering expanding to other regions of Australia, it’s essential to familiarise yourself with the different tax laws and financial regulations applicable in those areas. 

For instance, in Sydney or Melbourne, businesses must adhere to state taxes like payroll tax, stamp duty, land tax, and many more. However, Western Australia imposes only payroll tax and land tax regulations. Therefore, if you plan to expand your business to Perth, it’s vital to understand the new set of obligations that may apply. 

To ensure you remain compliant with all relevant financial regulations when expanding to different cities or states in Australia, hiring a professional accountant can be a prudent decision. They can efficiently navigate the nuances and complexities of various tax laws, ensuring your business remains compliant and financially sound.

Accounting for Specialized Business Circumstances

As your business evolves and grows, certain situations necessitate the specialised skills of a professional accountant. There are three particular scenarios where their expertise becomes indispensable:

  1. During an Audit – Facing an audit can be a daunting task due to the intricacies of the process. During such times, an accountant’s expertise is invaluable. 
  2. Unforeseen Circumstances – There are instances when personal matters can significantly impact your business’s trajectory. These could range from a business partner departing to the company becoming a marital asset amidst a divorce. Such circumstances can alter the course of your enterprise. An accountant can provide savvy advice on tax implications, business structuring, business valuation, and the generation of financial statements in case the company is on the selling block.
  3. Securing a Business Loan – If you’re considering procuring a business loan, an accountant can offer critical insights to verify if this move aligns with your business objectives. They can guide you in selecting the most suitable loan structure, determining the appropriate loan size, setting up a feasible repayment plan, and preparing the required financial documentation.

Assistance Needed for Advanced Financial Reporting

Is your enterprise poised for the next growth phase that necessitates attracting additional investment? If so, the accuracy and comprehensiveness of your financial records become paramount, playing an instrumental role in influencing investor decisions. Precision in your Profit & Loss, balance sheet, and cash flow statements can make all the difference. 

An accountant, proficient in handling these facets, can compile these documents ensuring meticulous detail and accuracy. By doing this, you bolster your business’s credibility and augment the probability of securing investor confidence and capital. 

Furthermore, once investors come onboard, regular financial reports and updates become obligatory to keep your stakeholders informed. An accountant can facilitate this process effectively, allowing you to focus on steering your business towards its strategic objectives.

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