What Is the Ideal Time for a Business Owner to Hire a Professional Accountant?

Managing a business means making several decisions. Owners have to manage their customers, employees, and suppliers. Owners often put accounting tasks in their to-do lists at the end of the day. Owners can usually manage a business's finances at the start-up stage. A business usually doesn't have several transactions at the start-up stage. The bookkeeping, payroll, tax, and financial reporting processes also remain simple at the start-up stage.

But as the business grows, bookkeeping, payroll and tax and financial reporting processes also become complicated and time-consuming. Different books of accounts have to be maintained to report the financial position of the business. Many business owners feel they should engage the services of a CPA for small business accounting before it becomes complicated to manage the business. This helps business owners establish the right financial disciplines.

We, at Anchor Up CPA Corp., offer a range of accounting services to business owners to help them manage their financials, comply with their tax obligations and assist in making the right financial decisions for their business.

A Chartered Professional Accountant (CPA) can offer many services and do many things for a business owner, based on the needs of the business owner.

Things and services may include reviewing the business's finances, helping the business comply with and plan for taxes, financial reporting and advising.

• Considerations for GST/HST and applicable provincial sales taxes.
• Payroll accounting and reporting.
• Preparation of financial statements.
• Cash flow forecasting.
• Budgeting and business advisory services.

Not all services will be required by a business at any point in time. A new sole proprietorship for example will not require regular bookkeeping and accounting support as much as an incorporated business with employees.

The key is identifying the actual requirement of a business and providing the corresponding service.

When should you hire a CPA for small business?

Many individuals contact an accountant for the first time when they are filing their personal tax return. Usually, this works for businesses that are not very complex, however, it may mean there is little time to address issues and be proactive for the future.

There are several situations that may warrant engaging the services of a CPA for a small business including:

1. Start-Up Support

A CPA can help you understand the consequences of the various options and the kinds of records you are required to retain.

2. Bookkeeping Becomes Overwhelming

Bookkeeping can become overwhelming, especially for small business owners who do their own bookkeeping at the start of their business. Eventually, owners realize that they are spending too much time doing bookkeeping and that they are not primarily in the business to do bookkeeping. At this stage, outsourcing bookkeeping becomes necessary.

Using the owner to do the bookkeeping works as long as the records are accurate and the owner understands the bookkeeping implications and requirements.

Many failures occur in bookkeeping due to misplaced receipts, transactions being classified in the wrong categories, failing to do bank reconciliations, and failing to collect and resolve accounts receivable.

These problems can be resolved by a bookkeeping professional or a CPA and can establish a better and more reliable bookkeeping system.

Good bookkeeping gives management the opportunity to review the financial position of the business, and prepares information for the business to file tax returns. Bookkeeping allows the owner to focus on the day-to-day operations of the business.

It is advantageous for the owner to consult with a CPA to understand the tax implications of the decisions being made and to identify deductible expenses.

There's a difference between legally avoiding taxes and illicitly cheating the tax system. Managing cash flows is an important part of sound financial management.

A profitable business can have negative cash flow. A business can have a positive cash flow, and still be unprofitable. Generally, a negative cash flow means customers take 60-90 days to pay invoices while the business takes 30 days to pay suppliers. Unexpected cash outflows, such as repairs or loan payments, can also reduce working capital.

A CPA can be beneficial in helping the business owner identify cash flow problems and consider potential financial constraints. This can be useful in dealing with unexpected cash outflows.

Forecasts can help determine if there is sufficient working capital to support positive business growth, such as hiring more employees.

There may be changes to the business, such as the sale of goods in other provinces and/or the business operating from more than one location.

The systems that were sufficient to support the business at the beginning may be unable to support it in the long term. A CPA can be beneficial in improving the business' financial reporting.

Financial reports can show a variety of information, including trends in revenue and costs, gross and net profit margins, average monthly inventory, average receivables and payables, accounts payable and receivable aging, and the business' financial position. All of this information can help the owner make decisions about the business, such as pricing, staffing, budgeting, capital expenditures, and more.

It is also advantageous to have a professional review and interpret the information the reports are representing, in addition to your software.

A business may be able to manage routine bookkeeping and engage a CPA for assistance with business planning, tax reviews and filings. The extent of accounting support required is directly relative to the complexity of the business and the experience level of the business owner. It is also relative to the time, resources, and commitment the owner is able to dedicate to the business.

The price for tax return preparation is only one consideration when selecting a CPA for your small business.

It is important that your accountant understands your small business. Are communications regarding your finances clear? Do the services the accountant provides match your needs?

You need to feel a sense of relief financially when working with your accountant.

Why Anchor Up CPA Corp?

At Anchor Up CPA Corp, we understand that different stages of a small business may require different services.

We take the time to truly understand your business first. From there, we can make the most impact for you and your business.

Are you wasting time on your business because of accounting? Are you making important business decisions without adequate knowledge of your tax obligations? Are you uncertain about your financial position? It may be time to consider your options.

Your business doesn't need to reach a particular level of revenue, or experience a financial hardship for you to consider seeking the help of a CPA.

Early stage guidance helps to shape the foundation and processes of a business, and ongoing support helps to adapt and adjust to the changes that occur within the organization.

A CPA for small business accounting should be more than just the completion of forms and reports. The right support helps to understand your numbers and your business, and develops the skill and confidence to meet your business's future obligations.

If your small business is located in British Columbia, and you require customized accounting services or tax planning, contact Anchor Up CPA Corp.

After completing our Get a Proposal Form, we will discuss your financial needs, goals and the barriers and challenges you may be facing, in order to find the best way to design accounting and financial processes tailored to your business. We want to help you focus on the things that are most important to you.