The Right Accountant Is Critical for Business Success
December 28, 2022 •The Citizens State Bank Team
We’re Convinced That Every Business Owner Deserves an Accountant
Inside this blog, we’re unpacking why a bank is making this suggestion and what you need to do in order to find, select, or assess the right accountant or bookkeeper for your business.
It's Vital to Assess Your Business's Financial Performance
We’re convinced that every business owner needs someone dedicated to reviewing, processing, and strategizing their financials. In fact, accountants are one of the first people you should pull up to your table of business advisors. It doesn’t just have to be an accountant, though. CPAs and bookkeepers can also fill this vital role—depending on your needs.
Access to solid, ongoing monthly accounting is crucial. It’s an important way to assess your company’s financial performance. You cannot know how well your business is performing – especially in uncertain economic times – unless you’ve got a clear picture of your financial status.
Secondly, too many businesses crash for a lack of adequate cash flow. In fact, companies are often valued by the amount of cash flow they produce. It’s an essential element of your treasury management strategy and comes with several key terms you need to know.
That’s why an accountant is a critical part of running a small- to medium-sized business.
Choosing the Right Partner to Help Steward Your Business's Financial Performance
Unlike the days of old, access to reputable accounting talent is more affordable today than it’s ever been.
You can certainly retain an accounting firm that has access to the expertise needed to serve you well. They can easily handle your ongoing accounting and payroll tasks to a CPA firm for a fixed monthly cost. They provide a full accounting department experience for small businesses and handle the day-to-day tasks of transaction coding, accounts payable, accounts receivable, payroll, management financial reporting, etc.
However, in the gig economy, there are also many qualified accountants who freelance, run their own small business, or are simply looking for a part-time role. Consider reviewing the Better Business Bureau or reaching out to one of the many accounting communities to find your preferred partner. A few examples include (but are not limited to): Guru, Paro, and Profit First Professionals.
Whether you outsource the role or bring someone in-house, it’s important to have a grasp on your role and what you both can do so that you can make an informed decision.
How to Know When It’s Time to Partner with a Financial Professional
There are so many factors to consider. Tight budgets and financial constraints cause many owners to cut back on accounting services.
However, this can be disastrous if not done with intention and strategy. Accountants are not a cost, but an investment. They help identify problems, overcome challenges, and help you strategize so that you are compliant, efficient, and cash flow positive.
So how do you know if it’s time to hire an accountant? If you cannot risk flying blind in your business, you need an accountant sitting at your strategic table. The right partner will more than deliver a return on that investment.
What Does An Accountant Do?
It’s important at this juncture in the conversation to also recognize that not all accountants do the same thing. They have specialties and may work with a certain industry or size of business.
Most accountants offer the option to support you with your bookkeeping and tax needs. While they often facilitate more than handling taxes, accountants can be worth their cost for tax planning assistance alone. They can also advise you on the best way to structure your business (i.e. partnership, limited liability partnership, LLC, etc.) and identify legal and tax issues that relate to your industry.
And in many cases, accountants collaborate with you and provide financial reports that help you gain insight into the financial performance of your business.
The right accountant will help you find deductions and optimize your tax return. Their tax knowledge, coupled with the financial planning they bring to the table, will likely help your business in the short and long term.
Bookkeeper vs. Accountant vs. CPA
As we stated at the beginning of this article, there is overlap in many cases between these three roles, and it’s important to identify which will serve you best. While all of these professionals handle business finances, their scope of work varies and their professional accreditations do, too.
Bookkeepers accurately and meticulously record a company’s financial transactions daily. They then hand this information over to an accountant or CPA. Their duties often include:
- Entering transactions
- Billing for goods sold or services provided
- Paying suppliers
- Handling payroll-related tasks
- Loan payments
- Producing invoices
- Creating financial reports
Bookkeepers track the money going in and out of a business, also known as cash flow. But they don’t usually analyze the cash flow within the context of your business’s larger business’s goals. That falls to the accountant.
Accountants analyze data, like a cash flow statement, and offer financial projections and other advice for helping a business achieve important financial goals. Cash flow accounting is a critical part of understanding your business’s strengths and weaknesses. It also points to where improvements need to be made. An accountant’s duties may include:
- Providing tax advice
- Preparing financial statements and cash flow statements
- Calculating tax liabilities
- Filing income tax returns
- Ensuring bookkeeping practices adhere to the norms
- Finding accounting discrepancies
- Developing and analyzing budgets
- Collaborating with auditors
CPAs are accounting professionals certified by a particular state to help individuals and businesses prepare and file tax returns. They have all taken and passed the CPA exam. CPAs’ duties often cover those listed above, in addition to:
- Preparing reports on transactions and cash flow projections
- Updating accounting records
- Representing clients in front of the IRS
- Performing detailed audits
CPAs have more experience and expertise than non-credentialed accountants, but that does not mean a bookkeeper or accountant is completely unqualified. There are, however, distinctions to keep in mind. For example, they are the only option on this list that can represent you in front of the IRS. CPAs are a great fit when your company needs to grow, manage wealth, and reach financial goals.
Your Accountant and Your Bank—a Trusted Team Who Steward Your Business’s Financial Performance
Here’s the bottom line: regardless of the market, many of the important financial management practices for your business are within your control. Having a handle on your cash flow and finances, for example, presents you with more flexibility to identify and capitalize on your opportunities.
Your accountant will help you prepare and analyze your company’s financial health so that when the time arises for a loan, line of credit, or other related business need, you can engage your local community bank (that’s us!) ready to move forward with confidence.
The views, information, or opinions expressed in this article are solely those of the author and do not necessarily represent the views of Citizens State Bank and its affiliates, and Citizens State Bank is not responsible for and does not verify the accuracy of any information contained in this article or items hyperlinked within. This is for informational purposes and is no way intended to provide legal advice.