An accountancy firm is a company that provides accounting services to small businesses. A small business needs to have an accountant because it helps in managing the finances of the company.
Accountants are professionals who perform financial tasks and are qualified to do so. They can help with tax, bookkeeping, budgeting, and other financial tasks that come with running a business. There are even companies, like CFOShare, that offer part-time CFOs, strategic financial planning, and forensic accounting.
This article will cover the advantages and disadvantages of using an accountancy firm and how they can aid you.
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Advantages of hiring an accountancy firm
Many small business owners have relied on the services of a bookkeeper to ensure their accounts are kept up to date. This ensures the administration side of accounting is up to date. However, an accountant can offer a more strategic view and provide business owners with financial insights based on information held in their clients’ books.
This is the position that Michael Savage in New Canaan, CT identified when he started 1-800 Accountant. Michael Savage New Canaan recognized that small businesses would also benefit from the Big Four levels of service when it came to accountancy services.
1) Accountants save you time
The number one reason for hiring an accountant is to save time. They can handle the financial side of running a business, allowing you to be free to do other things. This includes concentrating on the business aspects of your company.
The accountant you hire should be able to take care of all the accounts and supply you with a monthly statement form that shows how much you have made and spent. They will also perform annual tax returns to get your company’s money back. This is a very important task for every company, as it can save a lot of money on taxes at the end of the year, which means more money for running the business.
2) Financial record-keeping
Accountants keep your financial records organized and up to date. They also prepare the reports that you need so that you can assess your business regularly. Your accountant will give you insight into how you are performing and what areas of your business need improvement. Having accurate records is important because it shows that you are organized and working in accordance with the law. You will have to pay taxes if appropriate, but having complete records helps to make tax time easier instead of being full of stress and hassles.
3) They are tax experts
An accountant can make the tax time easier for you by having all the records prepared and accurate. They know what expenses are deductible from your taxes, which helps to save money on taxes. It also helps them to find legitimate deductions that will lower your tax bill and means more profit for your business.
Even if you are unfamiliar with the tax code, your accountant will advise you of what is allowed and help you prepare for the tax year. This is especially important for new businesses, as it can be overwhelming to figure out all the rules and regulations.
4) Bookkeeping services
Your accountant will keep your business’s finances in order. Depending on how busy you are running your business, they can provide bookkeeping services that include recording purchases or sales, maintaining records of inventory and income, and ensuring that financial reports are prepared regularly. These tasks may seem like simple things to do, but without doing them, it can get difficult when preparing financial statements or tax returns at the end of the year.
5) Less chance of getting audited
By having a detailed accounting system in place, you reduce the risk of getting audited. The Internal Revenue Service (IRS) looks at businesses with specific requirements to avoid big troubles. Businesses must keep excellent records so that they will not get caught in any trouble with the IRS when it is time to file income tax forms.
6) Insurance claims
Accurate accounting records will help you when it comes to insurance claims. Policies are more likely to be paid out if the records show that you have kept good track of the value of everything contained in your business. This is why having an accountant on board is important.
7) Provides financial and legal advice
Your accountant can provide you with sound financial advice and help you avoid costly mistakes. They will also be able to guide you through the legal aspects of running a business, which is crucial for small businesses in particular. Not understanding the business laws and regulations can lead to financial disaster, so it’s important to seek out professional assistance from your local accountants who can help keep your company on the right side of the law.
Disadvantages of hiring an accountancy firm
The main disadvantage is cost. Hiring an accountant to manage your finances can be expensive and you have to have a certain minimum amount of turnover to be able to make a claim on your financial package. Many small businesses struggle with the decision of whether they should appoint a full-time employee or use an accountant to keep track of their finances. The biggest worry for many business owners is thinking about the cost, and not too many small businesses can afford the big accounts packages that accountants offer. However, there are ways in which you can cut down on costs by hiring an individual contractor instead of having someone employed full-time.
Accountants aren’t free
You will have a monthly bill from an accountant, as they charge a monthly fee for their services. This is just a normal business practice, so you shouldn’t worry if you are accustomed to it. However, you should be aware that some accountancy firms have hidden fees that you may not know about. If you have any questions about the fees, ask your accountant so that the bill doesn’t come as a surprise later on.
Accountants are people too
Accountants are only human, and just like anyone else, they can make mistakes. It may be a small error that can be rectified quickly. However, as they are compiling financial information across the entirety of your company, errors can be significant and cost you a lot of money.
Ensuring you work with a business that has good reviews and a wide portfolio of clients will help to minimize the risk.
You can lose touch
The services that accountants provide are time-consuming. Sometimes, some of your business’s financial work is given to them and you don’t know what’s going on inside the company. This is a risk for you, as you can start to lose touch with the financial workings of your business.
To tackle this, you must have a close working relationship with your accountant. This will ensure you are kept in the loop when it comes to the finances of your business. You can also agree on the most appropriate reports and frequency of the reports to allow you to stay in control of your business’s finances.
In conclusion
There are countless numbers of accountancy firms out there, but it takes a lot of time to research each one. You should do your homework and make sure you have hired the right one for your needs.
When searching for an accountant, you must check their credentials and how long they have been in business. You can also ask questions about reviews or feedback from previous or current customers, which will give you insight into how the organization operates.
You want to work with an accounting firm that optimizes your company’s profits while keeping taxes at a minimum. Choose an accounting firm that has a reputation for providing excellent customer service while offering competitive rates and personal attention to your business’s unique financial situation.
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