If you own a small business, you may be tempted to try to handle accounting needs on your own. Unfortunately, this can lead to many issues, including hiring a professional to fix all the mistakes that were made. In the long run, this is only going to cost your business more money than if you had hired an accountant, to begin with.
From handling the books on a day-to-day basis to understanding complex documents like the ASC 606, accountants play an essential role in any business. Keep reading to learn some of the other reasons to hire this professional service provider.
Signs You Need an Accountant
Before diving into the benefits of outsourced accounting services, it is essential to know when these services are needed. There are a few indications that will let you know that these services are required.
An Initial Round of Funding Has Been Raised
A good benchmark for initial funding rounds is $500K. If you have raised a Series A, a SEED round, or something similar, it is time to engage with a third-party accounting firm.
If you have increased costs and expenses that you have to keep track of and have taken on new employees, you need to improve financial reporting. If your business is growing, you must fully understand your cash flow and costs as things continue to grow.
Ability to Focus on Your Core Business
One of the top reasons you should hire an accountant is to ensure you and your employees can focus on building or growing your product or service, creating new partnerships, marketing, sales, and developing new relationships. What this means is that you have core business activities versus non-core business activities. During the early stages, specifically, you must separate core and non-core and focus on the things that ensure business growth. An accountant will take some of these non-core responsibilities off your plate, freeing up your time to focus on other business essentials.
Receive Helpful, Accurate Financial Information
If you are working to raise equity funds or get financing by reaching out to investors, you need high-quality financial information that accountants can provide. These financial statements are also an essential part of tax reporting and offering updates to your investors. Something that is just as important is that the financial information that your accountant provides will help you gain insight into the nature of your business. This is invaluable when it comes time to develop new, effective business strategies.
Accountants are Valuable Business Partners
When you outsource your accounting needs, it gives you the benefit of having another business partner. Modern outsource firms have a lot of expertise working with startups at any stage of the process. This level of experience and expertise is invaluable for your company when you are trying to do financial reporting, structuring deals, negotiating term sheets, financial planning, raising funds, and more.
Securing Third-Party Accounting Services
If you believe your startup business needs an outsourced accountant, there is a good chance you do. Remember, it is always better to get the accounting support you need earlier on than clean up messy, disorganized finances down the road. Regardless of what stage of growth your startup company is currently in, it is never too early to put the right financial system in place. This is something that is going to benefit your business now and in the future.
Finding the Right Startup Accountant Matters
It is important to note that not all accountants are the same. You have to find someone with prior experience working with startup companies. If necessary, ask other entrepreneurs and business owners about the outsourced accounting services they have used in the past. This will provide helpful insight when it comes to hiring an accountant to help with your startup company’s finances. Being informed and understanding what an accountant brings to the table will help ensure you get the necessary results to ensure your business’s financial health.