Many startups are strapped for cash during their early days, which means that entrepreneurs try to cut corners wherever they can.
This usually means that their marketing budgets will be affected, but also that they’ll do their own accounting.
However, even though being a business owner means understanding at least some basic things about money management, it’s still a bad idea to be frugal when it comes to accounting because it can be risky and you might end up losing more than you can save by not hiring an expert.
Accountants are also one of the many functional areas of business, and finances is an area you don’t want to skip.
So, given that only 56% of all small businesses started in 2014 survived to the fifth year, it’s clear that you’ll need all the help you can get, particularly in the field of finances, if you want to make it.
Here are 7 different ways an Accountant can help your startup grow.
1. Help You Pick the Right Legal Structure for Your Business
An accountant can help you make this important decision and select the most suitable type of company formation based on your needs.
Besides that, with an accountant on board, it will be much easier for you to reduce expenses with a tax write-off and thus make some considerable savings.
In other words, you most likely don’t know what all the possible deductions there are, while a well-versed professional in the field of accounting knows the ropes and can easily identify money-saving opportunities.
Last but not least, an accountant will make sure that your business is in compliance with all government regulations and protect you against making a costly mistake such as unpaid dues.
2. Keep the Books Balanced
Naturally, you need an accountant for bookkeeping purposes.
No matter how good you are in crunching the numbers, keeping the books balanced requires more than that. In a nutshell, it includes dealing with cashbooks, business bank accounts, ledgers, daily transactions, expenses, payments, and payroll services.
As you can see, it’s a lot of work, and though it might be possible for you to do take care of all that while your startup is in its early stages, you won’t be able to keep pace with all the tasks and requirements as your business grows.
Staying on top of managing all your expenses, invoicing your customers, making payments to your suppliers, and employee remuneration requires the assistance of a good accountant.
3. Take Calculated Risks
When we say risks, we don’t mean unethical business kind of risks. Growing your business means making risky decisions that can have a significant impact on your startup’s future.
That’s why enlisting the help of someone who knows how to calculate different risks and predict the outcome of your business decisions is essential. That way you won’t have to rely on your gut feelings and throw darts in the dark when it comes to taking some important business steps.
Apart from having someone to consult when it comes to the future of your startup, it’s also important to measure your progress and see whether you’ve managed to stay on the course, as well as identify any potential discrepancies with your previously established goals which may be hindering your growth.
4. Determine Profitability
Many businesses generate high sales revenues, but that doesn’t mean that they’re creating enough profits to be sustainable and profitable, and this can lead to their financial collapse.
Not all entrepreneurs are skilled when it comes to using their assets to generate their services, and many of them fail to determine potential financial drains.
An accountant can detect these financial drains and save your startup from falling through.
Besides that, business asset management is a complex procedure and you can’t do it on your own, so it’s good to know that accountants are trained to perform different management tasks. For example, they can act on behalf of business owners for management purposes, oversee whether the business property is properly used, and supervise business operations as well as other employees.
5. Save Time
When you’re an entrepreneur, your time is worth a lot in every sense of the word.
That’s why you need to learn to prioritize and focus only on high-value tasks, that is promoting your business, getting in touch with your prospects and customers and helping them solve their issues, looking for new clients, and improving your product or service.
This means that time-consuming, repetitive, administrative activities such as working on your financial reports, managing your payroll, or filling your taxes won’t help you make more money and will only take up a great deal of your time.
And yet, all these tasks need to be done properly.
So, instead of wasting your time doing something you’re not an expert in, hire someone who could pick up the slack and manage the financial aspect of your business.
This way, you will be able to use your time wisely and improve your startup’s financial health.
6. Create a Good Business Plan
A business plan is an essential part of building a strong foundation for your startup.
Many entrepreneurs make a mistake of not involving a financial expert when they’re creating this important document. The thing is that many startups need funding in order to grow. Stats say that 65% of businesses dealing with non-manufacturing goods production and services need external financing in order to exploit a new opportunity.
So, if you’re thinking about applying for a business loan or looking for investors, you should know that the financial section of your business plan will be scrutinized. This means that by hiring an accountant who will make sure that your financial records are neat, tidy, and detailed, as well as that they contain all the relevant information that might be of interest to your potential funders, you’ll be more likely to secure an investment.
7. Create a Budget
Creating a budget is another crucial step in running a business.
The main function of a budget is to outline different expenses necessary for different aspects of your startup, meaning that you will need budgets for marketing, hiring new employees, purchasing equipment, and improving your product or service among many other purposes.
And, in order to effectively allocate money to all these business activities, it’s best to have an accountant at hand, as it’s important to properly determine what essential business items are and how much money you should spend on each of them.
As sticking to your budget is indispensable for the success of your startup, you can also rely on your accountant to keep track of everything and prevent any financial error.
Studies have shown that poor accounting and financial planning play an important part in business failure. To avoid this worst-case scenario it is worth getting your finances right from the start and hiring a reliable accountant.