Why does your business need an accountant?

Most small business owners are unaware that 80 percent of businesses fail within the first 18 months. Poor financial management is often the cause of business failure. However, many business owners go it alone to manage their money despite these dire consequences. A recent study found that 53 percent of small business owners do not use an accountant at all. Even more shocking, 27 percent of business owners use pen and paper to keep track of their finances. Despite the fact these businesses are not worse off for not having an accountant, we shouldn't underestimate how much knowledge and experience they can provide. For example, cars are serviced by a professional mechanic who can keep things running smoothly and spot potential problems. Small businesses require the same attention from a professional accountant. The role of an accountant goes beyond tax filing. Accountants can analyze your finances and create a forecast for the coming year to ensure your business is healthy and prosperous.

Even if you've struggled with managing your finances in the past, it may feel intimidating to share your business's ins and outs. But by teaming up with an accountant, you'll be able to achieve your goals and set yourself up for long-term success. As per my point of view, here are five reasons why your business needs an accountant.

• Get all your deductions

Many business owners are busy trying to figure out how to maximize their deductions during this busy tax season, but it may be too late by the end of the year. An accountant can help you identify these potential business deductions throughout the year, advising you on how to make strategic choices for your year-end deductions. In my opinion, some business owners forget to track and account for items such as depreciation, out-of-pocket expenses, and home office space. Don't let money slip through your fingers. That is where an accountant can help a firm.

• Avoid an audit

One of the best reasons to hire an accountant is to avoid audits. Unfortunately, most people think of accountants as someone who can fix these problems after they happen. The most important thing to remember is that an audit can easily be avoided by consulting an accountant year-round. Businesses can be audited for numerous reasons: from too many errors on tax forms to being too charitable to excessive write-offs. Think of your accountant as a long-term partner who cares about your business and keeps it fiscally sound.

• Save time and energy (and sanity!)

Most entrepreneurs believe that a tight budget means they cannot afford an accountant. Still, consider how much time and effort it takes you to manage your finances yourself (not to mention the possible errors you could make during the reporting process and losses resulting from poor financial decisions). In that case, the cost is undoubtedly outweighed by the benefits. The focus of any entrepreneur should be on running the business. Investing in a professional accountant and using him or her on an ongoing basis as an ongoing business advisor will assist you in keeping this focus while at the same time keeping you on track to reach your business goals.

• Make real-time decisions

During my consultations with business owners, I often hear them say they wish they could easily calculate the implications and consequences of a big office purchase or hiring new employees. Your accountant can help you navigate any easy hurdles if you have an accountant as your financial advisor to help you with budgeting and cash flow monitoring. With your accountant, you should take a collaborative approach, allowing decisions based on the latest data and taking advantage of a consultative relationship that will help you make business decisions.

• Plan for the future

Last but not least, hiring an accountant will enable you to get advice on how to plan for the future. By gathering reports from past months and examining seasonality, you can determine when to buy inventory and budget for big-ticket investments to stay competitive and successful. Most business owners are preoccupied with day-to-day operations. However, an accountant can take a step back and objectively analyze your business's big picture to find the best way to support its longevity. Having a pile of receipts and invoices to plough through at the end of the month or year can make business ownership seem daunting. However, "many hands make light work," and partnering with an accountant to guide you through your journey will lead to lasting success.

In a nutshell, accounting plays an essential role in a business's smooth day-to-day operation and future growth. Different accounting systems produce financial statements that various stakeholders use to make economic decisions. As a result, accounting systems boost economic growth and maintain investors' confidence.

Leave a comment with your opinions on how an accountant could be beneficial for your business.