small business owner

Why Small Business Owners Need an Accountant

Today’s small business environment is an ever-changing dynamic.  But, before your business gets up and running, you should seriously consider consulting with a reputable accountant to protect and guide your business endeavors.  Here are a few reasons why.

Small business owners are typically unseasoned.  A reputable Accountant can help you set up the business properly and often has the resources to help ensure your business entity is properly registered for tax implications.  Some of the start-up services offered can include:

  • Discovery - Discovery session to validate the business idea and review the pre-requisites for launch.
  • Business Plan - Help you create a documented success plan for your business start-up and beyond.
  • Structure - Help you determine which business entity (LLC, S-Corp, C-Corp, Sole Proprietor, etc.) gives you the most benefit from both a liability and tax perspective.
  • Set Up - Help you file for entity formation, register with the State, obtain a Federal Tax ID number and more!
  • Accounting System – Help you choose the accounting system you need to understand how your business is running and prepare documents you need for fundraising or bank loans.
  • DCAA Compliance – Really important if you’re considering working with as a government contractor.

Many small businesses use Quickbooks or similar software to manage the day to day transactions for their business.  A bookkeeper will typically handle the tasks associated with these transactions, keeping Quickbooks updated on a daily or weekly basis.  Bookkeepers may not always be credentialed and are not typically able to represent you for tax and other issues.  Be sure to check references and ask specific questions about how bookkeeping responsibilities are handled.

An accountant typically analyzes the data, prepares reports and helps the business owner forecast and prepare for growth and cash flow.  Accountants also will generally prepare your tax returns and represent you with the IRS, and/or in the event of an audit.

Sometimes, a business will have a bookkeeper take care of daily or weekly tasks, and then hire an Accountant to do oversight and tax work.  Whether you hire a bookkeeper, accountant or both, it is extremely important to have systems in place to protect you from fraud or embezzlement.  After all, according to a 2016 embezzlement survey by HISCOX, a specialty insurance company, 80 percent of embezzlements occurred at small businesses -- defined as those with less than 150 employees -- and 30 percent of embezzlement involved a loss of more than $500,000.

Some of the most common best practices are:

  1. When it comes to preparing checks or sending wires, the person preparing the checks is not the person authorized to sign them.
  2. The person who receives the mail is not associated with bookkeeping or accounting. In addition, checks, statements, or other correspondence from state or federal agencies, should be logged or documented appropriately before being handed to the appropriate person or department.
  3. Someone, other than the person in charge of payroll, should be responsible for handing out checks – way too often embezzlement occurs through a ghost employee or vendor.

Save yourself time, headaches, and money – don’t wait until your financials are a mess to hire a bookkeeper.  You’ll need good financial records and a track history of cash flow if you apply for funding, loans, or grants.  So, take the time to set your business up right and you’ll thank yourself later!

Emerald Financial Partners has been helping small businesses for over 38 years.  We are a proud women-owned business - contact us today to find out how we can help your business grow!

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