If you’re running your own business, you’ve likely outsourced or hired experts to take on certain aspects of operations, such as a small business accountant. Because accounting paperwork and details can be time consuming and complicated, even the smallest businesses usually hand over tasks like business tax filing to an accountant.
When you’re first starting out, you may be working with an accountant that’s familiar with the financial workings of smaller businesses. But as your business grows, problems can arise if your accountant isn’t familiar with the internal control and reporting needs of progressively larger companies.
Accounting needs of a growing business
As your business grows, your reporting needs increase as well at the sophistication of your internal controls. The most immediate effect that you’ll see is that you need to handle more transactional data in more complicated arrangements.
For very small businesses, many accountants don’t need to prepare a balance sheet, but as they grow this quickly becomes a reporting requirement. Many growing businesses expand by opening multiple locations, and the process of consolidating the financials of these locations into one report requires experience.
As your business grows even larger, your reporting requirements ramp-up significantly. This includes detailed payroll reports, more frequent sales tax reports, and significantly more detailed tax returns.
Beyond recordkeeping and reporting
So your business is growing and it’s time to search for an accountant that can meet your new needs. What new functionality should you be looking for in a new business accountant?
A good accountant does more than just file your returns, they also need to be a trusted financial advisor involved in many decisions you make as you build your business. That knowledge not only helps you to keep tax expenses at a reasonable level, it also should help you analyze the efficiency of your operation and make important decisions about expansion projects.
A good accountant keeps a watchful eye on ever-changing federal, state, and local tax laws, advises you of any upcoming changes, and prepares a strategy for dealing with them. Your accountant should also be involved in designing your internal controls system.
Once you’re dealing in thousands of transactions per month, the entire process of recording a sale, handling cash and payment methods, and consolidating that data needs to be mapped out in an efficient manner. While this is outside the scope of reporting to government agencies, it’s critical to ensuring that information doesn’t get backlogged or inaccurately reported.
Finally, a good accountant can advise you on how to handle the financial relationship between multiple entities. Accurately recording cash transfers, money owed or due, and the sharing of expenses between entities is important. It can be the difference between knowing your profitability on the unit level and having a vague idea of the overall performance of the enterprise.
What to look for in a good accountant for a growing business
Here are just a few traits of a good business accountant that can serve your growing business:
They have frequent contact with you: A good accounting partner for a scaling business doesn’t just speak to you when it comes time to file taxes, they check in regularly. This includes meetings to help you plan your tax strategy as well as to check your business’s operational health metrics.
They involve you in the process: Accountants for very small businesses may simply tell their clients to “send me your bank statements” and complete their returns without much further conversation. That process might make sense for the smallest entrepreneurs who aren’t knowledgeable about financial information, but for a growing business you’ll need to be intimately involved in the process. As the owner of a growing business, you need to be intimately involved in your bookkeeping decisions. This way, you can truly understand the impact of your decisions and not be in the dark about your performance until you receive your financial statements.
They have more priorities than tax savings: Avoiding overpaying on taxes is an important goal, but it can’t be the sole focus of your accountant. An accountant committed to your growth will weigh tax savings along with the need to report adequate profits to attract investors and lenders to your concept in order to fund expansion projects.
They conduct reporting that goes beyond the information you provide: A high quality accountant will do more than just take the information you provide and report it. A good accountant will put their CPA skills and training to use in determining the most meaningful way to represent your operational data, not only for tax purposes but also to make the reports more meaningful for your decision making. Also, many transactions that we consider to be business expenses might in fact be classified as distributions and take a trained eye to identify, further highlighting the importance of a good accountant’s review before filing.
They know your industry: Reporting rules vary industry-by-industry. There are specific requirements as well as incentive opportunities that can be invaluable if you find an accountant that truly knows your industry and has worked with clients in your industry before.
Finding a Good Business Accountant
Finding the right accountant for your business starts by seeking recommendations from other established businesses in your industry. Operators generally know who’s an expert accountant in your field, so asking a larger and more established business’s management team is a good place to start.
Another good source to find a qualified accountant is through a trade association. Accountants will often participate in public speaking events with trade associations. This is a good opportunity to sample their knowledge and get familiar with their working style.
After finding a few options for an accountant, give them a trial run. Turning over the entire accounting duties of your business to a new accountant can be an overwhelming task, especially if your business has a lot of transactional data and complex accounting practices.
Have a new prospective accountant do a financial review for you – looking over your tax returns and internal financial statements – and get their professional opinion of your business’s accounting practices. Their feedback will provide valuable insight into their motivations (if their priorities are focused on taxes or not), their working style, and their ability to provide strategic financial advice.
Pursuit can help your growing business reach higher
If your business is growing, you may need capital in addition to a new accountant for your operations. Pursuit offers more than 15 different loan programs that can meet your needs at any stage. If you’re searching for financing, contact us today.