An accountant is a professional who takes care of the accounting needs of an individual or a business, including book-keeping, tax preparation, financial advice, and more.

Today accountants are much more than simply the people that look after the figures.

An accountant can be an expert source of business advice and consultancy services, someone to lean on when times get tough or you are faced with new situations that you have not encountered before.

As a small business you may well have considered that you do not yet require a full-blown accountant. But, as you will see, there are many reasons why an accountant is more of a necessity than you may think.

1. Legal requirements. Each country has its own set of rules and regulations regarding financial reporting requirements and submitting tax returns, some may require that you have a registered and certified accountant prepare those final accounts.
2. Business planning. Do you need assistance determining your business structure – sole proprietorship, partnership, or corporation? A good accountant can help you plan the best business structure to both minimize any potential tax liabilities and protect your assets if anything goes wrong.
3. Design and set up your accounting system. Your accountant should help you plan how you will record your financial transactions to best facilitate year-end financial reporting. A simple but clear set of financial records helps you manage your business more efficiently.
4. Ensure that you pay the correct types of taxes in the correct amounts. Unless you are familiar with your tax system and have completed tax returns on a regular basis, I think you will be surprised to see what can be involved. Which taxes get paid when, how much leeway you have before fines and worse are incurred? Professional advice here can deliver massive peace of mind!
5. Advise you on deductions and how to separate your personal and business expenses. Make a mistake on deductions and you could either end up paying more taxes than you should or possibly even worse in the long run, less taxes than you should, which results in a lot of unwanted attention from the tax authorities. Either way, an accountant is there is to ensure that you get it right.
6. Manage your cash flow efficiently and accurately. Good cash flow management comes from good book-keeping. Are you up-to-date with payments and receipts? Have you collected everything due to you? Have you made sufficient provision for anything that you owe out? These are all important factors for managing your cash flow accurately and your accountant will make sure that you are on top of this.
7. Advise and guide you through an audit if you ever have one. Trust me on this one, you do not want to go through one of these unassisted! Your accountant will have completed many such audits by the tax authorities and they will know what to do when and what to say.
8. Advise you on specific transactions, such as whether it’s better to lease or buy. Looking at the acquisition of cars, plant and machinery through the eyes of an accountant can throw up different possibilities that us ordinary folk would never have considered. What are the tax implications, how will each method of purchase affect your cash flow?
9. Help you understand your financial statements. Your accountant should help you understand your financial records and statements. This is the only way that you will fully understand how your business is doing, and so is an important reason for using an accountant.
10. Help you with your exit plan. What is your plan when it comes time to stop running your business? Your accountant will be as valuable as a good solicitor if you ever decide to sell your business. They will know how to structure the sale to maximize your returns and protect you.

Once you have chosen an accountant, make sure that you communicate your needs clearly to your accountant. Communication is important in any relationship, especially when the relationship involves your finances. If you feel your current accountant no longer meets your requirements for whatever reason, you can always get a new one! At least you now know what to look for!

This article was written by Brian K Fitzgibbon CPA.

Brian is an experienced accountant and small business consultant. He runs his own business, lectures extensively on small business topics and has checked out and valued many hundreds of small businesses for buyers.

Brian is also the author of the highly acclaimed and invaluable
"How To Value A Business And Buy It Without Fear"
A do-it-yourself guide for first-time and experienced buyers alike.

To download a FREE Chapter from Brian's book please follow this link: "HowToValueBusiness.com"

February 7th, 2009 | Tags: accountant, accountant's role, business tips, buy a business, choosing an accountant, small business advice, value a business, why do i need an accountant | Category: articles | Subscribe to comments | Leave a comment | Trackback URL  |