DIY or Hire an Accountant?

Many owners of small business do their own accounting, usually with the help of a software package such as QuickBooks. This can make sense if you run a one- or few-person operation, are familiar with basic accounting, and have the time and inclination to take on the work yourself. For you DIYers out there, we recommend our IOU Financial Business Budget Smart Sheet to establish and track your budget.

For some, the question of hiring an accountant is confusing. Here are nine signs that indicate you should go ahead and hire one: 

  1. Knowledge: If you aren’t familiar with accounting terms, financial statements or report creation, you might need an accountant, at least in the beginning, to teach you what you need to know. If you don’t think you have the time to study the subject, you can keep the accountant on as long as needed.
  2. Taxes: Tax law is complicated, and one of the worst mistakes a business can make is to overpay its taxes. But even worse is to underpay and get caught, because then you’ll be hit by penalties and interest. Use an accountant if you don’t understand which deductions and tax credits to take, and/or if you don’t want to file your tax return on your own.
  3. Time: Let’s face it, bookkeeping can eat up your time and divert you from more important tasks. You need to operate the business, make staff decisions, market your offerings and troubleshoot problems. It shouldn’t be surprising that bookkeeping would be low on your priority list. You can hire a bookkeeper who knows how to do other accounting tasks – they usually charge less than full-blown accountants.
  4. Growth: Congratulations, your business is experiencing rapid growth. However, that also means you have more customers to attend to, more staff to hire, more vendors to negotiate with, and so forth. These activities require more paper pushing, number crunching and meeting time. With these management challenges, why not let an accountant lift some work off your shoulders?
  5. Profit margin: It’s nice when revenues grow, but less nice if profits don’t follow. The reason is invariably that your costs are too high. You could use an accountant with a sharp pencil to evaluate your overhead costs and suggest ways to save money. The savings could easily pay the accountant’s salary and hopefully a lot more.
  6. Investors: Have you grown to the point that you have investors? Well, they’re going to want to see professional reports that lay out the current financial condition of the business. Professional financial reports are also useful in recruiting new investors. An accountant can produce the reports you need and make them look professional – that will help keep investors happy.
  7. Expansion: If you are thinking about expanding into a new state, an accountant will help you meet the regional reporting requirements for payroll tax, income and sales. Expansion to a new state may include opening new locations, creating new distribution logistics and hiring new staff. An accountant can help you track the costs of these moves.
  8. Merger/acquisition: If you are looking to buy or sell your business, you’ll need an accountant to evaluate the entities involved and how to structure the transaction in order to minimize taxes.
  9. Audit: If the IRS has signaled that it wants to audit you, a CPA or other qualified accountant will be able to represent you to the IRS. This can help prevent you from making mistakes as well as lower your stress level. Generally, you don’t want to face the IRS on your own.

12 replies
  1. Ben Allen
    Ben Allen says:

    I appreciate the information on whether or not you should hire an accountant or if you should do your own finances, it was very helpful. I agree that hiring an accountant is most definitely easier and it can benefit you so much more, they can help you save money when it comes to taxes. My brother has been debating on whether or not he should hire an accountant because he is getting tired of doing his own taxes, I will be sure to share this with him.

    Reply
  2. Alice Jones
    Alice Jones says:

    Thank you for listing all these tips on whether or not I should get an accountant. My business recently has been growing and expanding at a fast rate. I’ve been able to handle the majority of the side effects, but I don’t think I can attend to the needs of all of my employers and customers on my own. Like you said, this requires someone who can figure out all the numbers. I think having someone there to help me would be very beneficial.

    Reply
  3. Ashley Maxwell
    Ashley Maxwell says:

    Thanks for your comment about how accountants can help you when you don’t know many financial terms. I like how you said that they can teach you and help you with your taxes. My sister is considering into good accountants to help with her financial planning.

    Reply
  4. Ashley Turns
    Ashley Turns says:

    The company I work for has been wondering if it might be time to hire a qualified accountant or keep working on it themselves. So thanks for mentioning that getting new investors may require that you have reports on the financial condition of the business. I’ll be sure to tell my boss that he should definitely be getting a qualified accountant since I’ve heard that he’s been looking for some more investors.

    Reply
  5. Mina Edinburgh
    Mina Edinburgh says:

    I appreciate it when you said that clients and investors want to see professional financial reports, so if the person is looking into getting them, he should also hire a CPA to make the reports for him. My friend needs to see this since he mentioned wanting to expand his business. This is another reason why he should hire an accountant. The other being his inability to do manage the finances once they become too complex.

    Reply
  6. Mark Murphy
    Mark Murphy says:

    I found it really interesting that an accountant can help you expand your company. I don’t own a company, but I know that I would want to handle my growth responsibly. If I ever own a business, I will be sure to hire an accountant right away!

    Reply
  7. Sherry Gajos
    Sherry Gajos says:

    I really liked what you said about how complicated tax law is and how an accountant can help if you don’t understand which deductions and tax credits to take. My friend is starting a small business to help sell her artwork and she’s not sure what to do with the tax portion. Thank you for the information about how a CPA can help her with the taxes and ensuring they are filed properly.

    Reply
  8. Olivia Pearson
    Olivia Pearson says:

    I like how you said that hiring an accounting service for your business is beneficial because it will save you the time of having to figure out how to file your taxes yourself. My friend is thinking of starting his own business but he’s nervous about managing the financial aspects while still hiring a team of employees, training them, and marketing his product. I’m sure that if he did start his own company, he’d really benefit from hiring an accounting service that can correctly take care of the financial elements for him so he can prioritize building a successful company. Thanks!

    Reply

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