Think only big businesses need accountants? Countless business owners think their company is too small for a professional accountant. And a lot of business owners struggle to manage bookkeeping, payroll, and the other financial responsibilities that come with running a small business.

Simply put: It’s not a coincidence. Accountants perform important services for small businesses. Not only does professional accounting keep your business compliant, it also helps you stay afloat financially.

Want to learn more about what tax and accounting services can do for your business? Here’s what an accountant can help your small business achieve.

Bookkeeper vs. accountant vs. CPA

First, let’s clear up the difference between a bookkeeper, an accountant, and a CPA.

• It’s a common misconception that all accountants are Certified Public Accountants. A CPA is a special license that grants an accountant the ability to prepare audited financial statements and represent a taxpayer before the IRS.
• Regular accountants handle a wide array of business functions including providing tax and business planning advice, preparing detailed financial statements, and managing cash flow. Accounting firms may also help with bookkeeping and payroll.
• The main reason to hire a bookkeeper is to save time. Bookkeepers document financial transactions, manage accounts receivable and accounts payable, process payroll, and handle bank reconciliations, among other routine tasks.

What about financial software?

Businesses are increasingly relying on software to automate bookkeeping and reduce accounting costs. What can (and can’t) accounting software do for your small business?

• One of the top functions of financial software is processing payroll quickly. Accurate payroll is a must for businesses of all sizes. Software that calculates, files, and issues payments automatically keeps a business in the good graces of both its employees and the IRS.
• Automated bookkeeping also significantly reduces errors, delays, and lost productivity related to manual data entry.
• The best accounting tools make it easy to generate key financial reports like cash flow statements, income statements, and balance sheets. However, while software can generate these reports, it can’t analyze them for you. To truly understand your company’s financial position, you need an accountant.

When to hire a small business accountant

When should you call an accountant for financial analysis and advice? Here are four times a business needs the insights of a professional accountant.

• The past year is a great example why every business needs an accountant on speed dial. Accountants and CPAs provided critical financial advice to businesses as they sought to preserve jobs, manage cash flow, and rebuild during the COVID-19 pandemic. 
• Want to save money on business taxes? From keeping up with the latest tax changes to choosing the best retirement plan for your employees, an accountant provides expert insights to minimize your tax burden.
• Accountants also help businesses decide the right time to hire—or the right time to scale back along with legal considerations for terminating employees.
• Even if you’re just starting a business, it’s worth finding an accountant you can turn to for questions regarding the best legal structure for your business (e.g., deciding between an LLC or sole proprietorship) and your tax responsibilities as a small business owner.

Whether you have one employee or 100, you need the expertise of an accountant to make smart financial decisions for your small business. 

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