It is important to note that a significant proportion, approximately 80 percent, of businesses in the United States experience failure within the initial 18 months. This is often due to inadequate financial management, which emerges as a primary contributing factor.
Despite the gravity of these consequences, numerous business owners choose to manage their finances on their own. Recent findings from a report indicate that a considerable 53 percent of small business owners do not enlist the services of an accountant. Additionally, an even more astonishing statistic reveals that 27 percent of these respondents rely solely on manual methods such as pen and paper to monitor their financial affairs.
While it would be premature to assume that these businesses are inherently disadvantaged due to the absence of an accountant, it is essential to acknowledge the extensive expertise and experience that accountants possess. Their involvement can provide invaluable insights and guidance that should not be underestimated.
The Role of An Accountant in A Business
The role of an Accountant encompasses various financial responsibilities within an organization, including the maintenance and interpretation of financial records. Their duties often entail overseeing tasks such as reconciling bank statements and calculating payroll to ensure the company maintains a solid financial position.
An Accountant’s responsibilities can be extensive, ranging from auditing financial documents and conducting financial audits to reconciling bank statements and calculating taxes during the preparation of annual returns. Accountants collaborate closely with business leaders in small enterprises or managers in large corporations to ensure the accuracy and reliability of their financial records.
A competent accountant is not merely proficient in finance but also possesses expertise in human relations and effective communication. One effective pathway towards becoming a proficient Accountant is by pursuing an online MBA accounting degree which provides comprehensive knowledge and specialized skills in financial management and accounting practices.
Additionally, an online MBA in accounting equips aspiring accountants with advanced analytical tools and strategies and a deeper understanding of regulatory frameworks and industry standards, enabling them to navigate complex financial challenges and make informed decisions for the organization’s financial success. Moreover, professionals can easily advance their careers due to the flexibility offered by online MBA programs.
Now let’s dive into why businesses should hire accountants to manage their finances.
1. Saves Time and Resources
By opting to engage the services of an accountant, entrepreneurs can effectively save valuable time and energy and maintain their mental well-being. The misconception among most entrepreneurs is that a restricted budget prohibits them from affording the expertise of an accountant. However, the advantages undoubtedly surpass the associated costs when one considers the substantial amount of time and effort needed to manage finances independently, along with the potential for reporting errors and subsequent financial losses resulting from ill-informed decisions.
As an entrepreneur, your primary focus should revolve around the efficient operation of your business. Investing in a professional accountant and establishing a continued partnership with them as a strategic business advisor will aid in preserving that focus while simultaneously propelling you toward attaining your business objectives.
2. Develop A More Realistic Business Plan
Engaging the services of an accountant during the initial stages of business planning allows entrepreneurs to gain a more pragmatic perspective on their proposed business ventures. While entrepreneurs may possess exceptional ideas, the viability of these concepts within the current landscape remains to be determined, rendering their potential success precarious.
Through the inclusion of an accountant in the early phases of planning, a more grounded and realistic business plan can be developed, serving as a guiding framework. Accountants can generate comprehensive reports and financial projections, offering professional insights and guidance to ensure the creation of an effective business plan. By leveraging their expertise, entrepreneurs can enhance their decision-making processes and improve the prospects of their business endeavors.
3. Avert An Audit
An imperative rationale for enlisting the services of an accountant is to reduce the fear of facing a burdensome audit.
An audit can be avoided through an accountant’s continuous guidance and counsel. Numerous factors can trigger a business audit, ranging from frequent errors on tax documents to instances of perceived over-generosity in charitable contributions or excessive deductions. Consider an accountant as a long-term partner deeply invested in your business’s financial well-being. They can proactively safeguard against audit-related challenges and maintain the sound financial standing of your enterprise.
4. Get A Complete Breakdown of Your Deductions
Amidst the demanding tax season, the foremost concern for numerous business owners lies in optimizing their deductions.
Accountants possess the expertise to identify potential deductions throughout the year. Their guidance empowers business owners to make informed decisions and strategize effectively for year-end deductions. It is common for business owners to inadvertently overlook crucial deductions related to depreciation, out-of-pocket expenses, and home office space. With an accountant’s expertise, business owners can avoid leaving substantial financial resources untapped, ensuring they leverage every available opportunity for maximizing deductions.
5. Increase Your Chances of Getting a Business Loan
Obtaining a business loan from a financial institution requires convincing proof of one’s ability to repay the borrowed money. An accountant can provide accurate financial figures that bolster the loan application.
Additionally, an accountant’s expertise extends to aiding in the identification and assessment of the most advantageous loan options available to the business. Through their comprehensive understanding of financial instruments, an accountant can offer guidance on selecting a loan type that aligns favorably with the specific needs and circumstances of the business. By leveraging an accountant’s insights and recommendations, entrepreneurs can enhance their prospects of securing a business loan approval and ensure optimal terms for their financial endeavors.
6. Future-Proof Your Business
A significant advantage of engaging the services of an accountant lies in their ability to provide invaluable guidance on future endeavors. You may analyze prior financial records together, noting seasonal patterns and volatility in your business operations. This comprehensive review enables you to make educated decisions on optimal inventory purchase timing and strategic resource allocation for large expenditures, boosting your competitive edge and long-term viability.
As a responsible business owner, your primary attention is on the day-to-day administration and execution of operational activities. However, by engaging the help of an accountant, you may benefit from their comprehensive viewpoint and impartial assessment of the company’s overall situation. This perspective helps them manage the complexity of financial planning, assuring your company’s long-term growth and viability.
Every business requires the services of an accountant to ensure efficient financial management. With their expertise, businesses can save time and resources, develop realistic business plans, avoid audits, maximize deductions, increase loan approval chances, and plan for the future. Accountants are critical in maintaining financial health and long-term business success. Their extensive experience and strategic views are great tools for entrepreneurs dealing with complicated financial difficulties and pursuing long-term success.