I hear this often from entrepreneurs and small business owners: "I have the popular accounting software to manage my business checkbook. I can use it to create invoices and pay suppliers. I even use it to manage my payroll. It is simple, and it is just like my checkbook. I think I have it all covered. I use an accountant for my taxes, but do I really need an accountant other than tax season?"
The answer is yes. You should have an accountant who can support your business year-round.
An accountant offers much more than bookkeeping and taxes. In fact, an accountant’s area of expertise often goes far beyond that of your neighborhood bookkeeper. While undoubtedly a bit more expensive than a bookkeeper, you should be able to rely on an accountant to add value to your business operations.
For example, an accountant will:
- Help you read and understand your financial statements. If you are just printing them off your accounting program each month without a thorough understanding of what you are reading, your business may be in trouble, and you may not even know it. An accountant can help you decipher the numbers on your financial statements and determine how to use those numbers to determine the actual condition of your business.
- Advise you on Generally Accepted Accounting Practices (GAAP). Like most business operations, accounting has a defined set of “business rules” or the “acceptable way to do things.” Although most accounting software packages provide some safeguards to prevent you from making significant errors in bookkeeping and provide an audit trail for what you have done, they will not force you to follow these standard business rules. Regardless of your business size, you will want to be able to justify your record-keeping and financial reporting by the accepted practices.
- Provide a dose of business reality. As a business owner, one of the most challenging things to do is to look at the books objectively. An accountant will provide you with an objective outlook on how your business is really doing. Moreover, an accountant can guide you in getting back on track if you find your business is heading south.
- Provide finance-based business guidance. Most accountants can also provide you with various other business services and advice outside what you might consider being the traditional accountant role of bookkeeping and taxes. Some accountants have experience in other areas of business, too, and can also provide support for:
- Financing options and sourcing
- Loan proposal assistance
- Cash Forecasting
- Budgets and projections
- Business valuation
- Fraud investigations
- Business succession planning
- Strategic and long-range business planning (business plan development)
- Accounting software systems review and set-up
This is not to say you should turn these functions over to an accountant. You must understand the numbers that drive your business deeply as a business owner. An accountant can serve as a financial mentor to help you better understand why the numbers are significant and how to use them better to make more intelligent business decisions.
Remember that while accounting software can help you manage your daily administrative tasks relative to accounting, the software is just a business tool. As such, the software is not a replacement for a knowledgeable accountant who can help you navigate the financial side of your business.