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How to tell when your business needs an accountant

Smarter Staff
Smarter Writer

This article has been written by the Smarter Business™ Staff Writers

Smarter Staff
Smarter Writer

This article has been written by the Smarter Business™ Staff Writers

Accountants are not simply the people who put in your BAS, tax and compliance returns, they help you at various stages during the growth of your business and, ultimately, the sale of your business. But does that mean you need to hire an accountant as soon as you open for business? Probably not; but there are definite signposts for when you need an accountant.

That is not to suggest that you should take on the compliance work or bookkeeping work in order to save money and wait for a time when your business is profitable. Like virtually all activities in a business, bookkeeping and accounting can be delegated to enable the entrepreneur or business owner to focus on what you do best: develop your business, set strategy, recruit smart employees and win customer loyalty.

Accountant office money management

The start-up stage

Start ups generally do not need an accountant unless there are complex trust and incorporation issues to execute, but some businesses with a high level of activity will require a considered approach to bookkeeping if not accounting. An accountant can advise on the best structure for you and your circumstances and the business being developed.

Buying a business rather than building a business is a pathway that will usually require an accountant to investigate the accounts of the business being purchased. For example, they can check whether the company's assets (such as equipment), are fully owned or leased or part-paid for and whether the company has any outstanding debt.

An accountant may be an important member of your team where you may be seeking alliances and capital. If your skills are not in developing business plans then an accountant can be worth much more than their fees if they are instrumental in building a documented business case which secures finance, partnerships or alliances crafting financial projections to help you create a business plan that's realistic, professional and more likely to succeed.

Growing pains

Growth inevitably brings its pains. Measuring key business metrics, such as the ratio of salaries and other employee payments to total revenue can become important tools for you in managing and growing your business and ameliorating pain. Again, it may be worthwhile in sheer cost benefit terms to have an accountant help here by producing charts and graphs so you can see how the ratio changes over time.

An accountant can help you handle growth transitions, such as hiring employees or taking on more office space as well as payroll, superannuation obligations and so on, leaving you free to look at the bigger picture of the way your business is growing.

An accountant can also help with investigating the business capital and where it is being applied, looking for ways to improve cash-flow such as managing collection time on invoices and optimising inventory.

Borrowing money

The days when you could pick-up the phone and ask your bank manager for an overdraft facility to meet some pressing payments are gone. Establishing a loan or credit facility is now a process which embraces a raft of documentation and including past sets of accounts (P&L, balance sheets) as well as projections, statements of personal assets, director guarantees, business plans, valuations and possibly more. An accountant can help improve your chances of securing finance and avoiding the very expensive route of maxing out credit cards.

A prosperous exit

Just as purchasing a business will usually need the services of an accountant, so too will the sale of a business. The business will need to be made ‘sale-ready’ with a full kit of accounts and accompanying financial statements. And, perhaps most importantly, an accountant can help you structure your financial affairs so that you get the most money from selling your business. Now that’s money well spent!

An experienced accountant will be able to:

  1. Complete and lodge legal and compliance documents for your business 
  2. Keep your company up-to-date with the latest tax obligations 
  3. Prepare annual statements of accounts 
  4. Maintain records of directors and other administrative personnel 
  5. Organise and record share allocation for a company structure when the business is formed, when a business partner leaves or a new equity partner joins

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