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Home Blog What Is Your Accountant Doing?
Don’t let the headline scare you: we’re not implying your small business’s accountant is up to no good. In fact, it’s quite the opposite: your accountant is tackling so many behind-the-scenes items for your small business that it’s sometimes hard to keep up.
It can be easy to overlook the role of an accountant for your small business. You know they’re there at tax time. But they may also be working in the background, filing legal paperwork including business licenses, keeping tabs on expenses and budgets, and so much more.
That’s why we put together this handy list of all of the cool things that your accountant may be doing for your small business.
What does your accountant really do? The first area is setting your business up at every stage so you’re running as efficiently and optimally as possible from a finance perspective. The second is staying on top of the finance and tax laws of the land and in your industry so you’re always in compliance and not paying for non-compliance. Let’s look at both a bit more closely.
Accountants deal with money – but in small business, money goes beyond just how much cash is in the bank. It may also extend to legal requirements of operating and optimizing your business. Here are some of the financial management tasks your accountant may be doing.
Startup Stage — from inception to feeling confident that you have something good
Mature Stage — from something good to something great
Financial compliance covers all the payments you must make and steps you must take for the IRS. This may include everything from paying your corporate taxes on time to properly declaring your 1099 contractors..
You want someone keeping tabs on this for two very important reasons:
An accountant who understands your industry won’t bat an eye at the number of rules and can quickly tell you which rules apply to your company. This, btw, isn’t a one-time thing: compliance requirements can change as your business grows, particularly when you’re adding team members.
Your accountant can also verify the accuracy of your financial statements. External entities such as stakeholders or lenders may request specific documents from you as well as proof that the financial reports they’re using have been validated.
“Hogwash in, hogwash out.”
It’s an old business axiom that means the conclusions you come up with are useless if the data that led to them is faulty or sloppy or incomplete. It’s true of everything to do with your business, but it’s especially true about your accounting. The benefits of having a good accountant mean nothing if you’re not organized. BTW, staying organized is easier than ever.
Giving your accountant what they need means that they can focus on helping you with strategic decisions instead of chasing down data. For example, they may recommend how and when to invoice customers to improve your cash flow. They could also show you how to maximize your tax savings by changing when you account for inventory. These are all perfectly legal practices made possible with solid bookkeeping and leveraging your accountant’s expertise.
Now here’s the big question: Why is it important to know what your accountant does? After all, there are tools that can help you track the financial side of your business, pay and send invoices, and even see an overview of where how and where you’re spending your money and more, including Sunrise by Lendio (which is free to use, although there are some pretty dandy premium features, too, that both you and your accountant may love).
First, there’s the obvious reason for knowing how your accountant is helping your small business: you may one day need to replace your accountant (even the best ones move on eventually) and having oversight into the minutia of how they’re handling your business can make the transition to a new accountant simpler. Second, it’s good to know where to turn when you have questions or need information. For example, when you apply for small business financing, you may be asked for a copy of your business license. Before you start calling government agencies to determine if you ever filed one (oops!), a quick call to your accountant could net you exactly what you need.
Katherine O'Malley is a contributor to the Lendio blog. A technology geek at heart, she splits her time between traveling, freelance writing, database administration work, and implementing SEO on her travel blog. In her free time, she loves to research the challenges small-to-midsize tourist suppliers face and find ways that technology can help them out.
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