If you are starting a new business, it's tempting to cut cost and manage your financial records by yourself, but be careful as this can hurt your business now and in the long run. This article explains why you should hire an accountant from day one.
Hire an accountant before you start your business
When you start a business, there are many actions you need to take and systems you need to set up to create the foundation for a successful business. Moreover, you should let professional handle the books while you focus on other important tasks to build your business.
Business Structure
The most important topic and a very common question is to determine the best business structure (i.e., sole proprietorship, LLC, corporation, partnership) for your situation. There are benefits and disadvantages to registering your business that all small companies and individuals need to consider. You can register as a limited liability corporation (LLC), Corporation, Partnership, or as a Sole Proprietorship. An accountant can look at your specific situation and help you make the right choice.
There can be legal and tax advantages to incorporating your business, but there are also a few downsides. Your accountant will be able to help you with this.
Business Plan
Business plans are a challenging startup step for many small business owners who are pitching their business ideas to investors or credit institutions for funding. Many startups fail because the assumptions used are too optimistic or are not based on the current market conditions. An accountant can help you create a business plan that is based on realistic information.
Business plans come in many shapes and sizes; your goal is to convince individuals to buy into your vision, and there's no one-size-fits-all approach to that. However, there are a few common elements no plan should lack. When starting a business, optimism and risk tolerance are helpful ingredients. However, an accountant can help to balance out the plan by using real-life experience and knowledge gained by helping many different businesses.
Business Registrations
For new businesses, there are many different programs to register for , and it’s not always easy to tell what is required. Seek professional advice to ensure your small business is registered for the appropriate programs and save time and money in the long-run.
Few common examples include:
Register for GST/HST early on to save money by claiming input tax credits.
Register for Payroll to avoid large interest and penalties on missed filings.
Register for WSIB Ontario to avoid penalties for missed or late filings.
These are just some of the many programs that a new business may need to register for. An accountant will be able to help make sure that your business is registered for appropriate programs and ensure registration happens at the right time.
Setup and Training of new Software
When starting a business, it’s important to have the right accounting software for your specific needs. Accounting software is used by individuals and business owners to enter income and expenses and track their finances. It’s especially important for small businesses because it is more efficient and makes fewer mistakes than manual processing.
Depending on the business model and structure, you may be able to get away with a basic spreadsheet for a while, or you might need a fully functioning cloud-based accounting system. Either way, an accountant can provide advice on the type of software you may need.
Financial Planning
Forecasting is a necessary part of creating a business plan. A full understanding of short- and long-term forecasting is essential for setting small-business objectives and for measuring growth. Each forecast requires data from yesterday, an eye on the present and a look toward tomorrow to envision and plan for sustainability and growth. An accountant can help you understand and forecast for the various costs involved in starting and building a business.
It can often be confusing trying to determine where to start and how to build a forecast. Your accountant should have a template that you can use to get started. He will also be able to sit with you to go through the numbers and create a balanced and accurate forecast.
Conclusion
Accountants can help you throughout your journey as a small business owner. He can help you handle growth transitions, such as hiring employees or taking on more office space. They'll look after the detail (payroll, employee tax management, property tax, utility payments and so on), leaving you free to look at the bigger picture of the way your business is growing.
As a CPA CGA, we have experience helping many businesses in each stage and we work hard to ensure that your financial objectives are met. Please contact us if you’re considering hiring an accountant.
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