Small Business Accounting: What to Know Before Hiring an Accountant

Small Business Accounting: How to Find an Expert Accountant

Very few business owners enjoy doing their own small business accounting.

Many business owners are stressed, have no time, and want to grow their business or spend time with their family (not stare at spreadsheets all day).

Right?

You didn’t get into business to do your own accounting, bookkeeping, or taxes. It’s a full-time job in itself.

Thankfully, hiring a small business accountant can be a gamechanger.

But how do you find the right one for your business? What should you look for? And how do you know they’re worth the investment? Let’s break it down step by step.

Why Do Small Businesses Need an Accountant?

There are many reasons to hire a small business accountant.

1. Saves Time

• Accounting can eat up hours each week.
• By outsourcing, you free up time to focus on growing your business.
• Tasks like bookkeeping, payroll, and taxes become someone else’s responsibility.

2. Ensures Compliance

• Tax laws can be confusing and ever-changing.
• A good accountant or CPA knows the ins and outs of regulations, ensuring you stay compliant (they have to stay up-to-date).
• They help you avoid costly mistakes or fines.

3. Maximises Savings

• Accountants know how to reduce your tax liability legally (even better if you can find one that specialises in your industry).
• They can spot deductions and incentives you might miss.
• The long-term savings can outweigh the cost of hiring a small business accountant.

4. Gain Financial Insights

• Want to know if your business is truly profitable? Small business accounting specialists can show you where you’re losing money, and where you can be more profitable.
• Accountants can provide reports, cash flow analyses, and forecasting to guide your business decisions.
• Accurate financial data is invaluable for scaling your operations or securing funding.

Small Business Accounting: What Does An Accountant Do?

You might think accountants just file taxes, but they do so much more. Here’s a quick overview of their key services:

• Bookkeeping: Keeping track of your daily financial transactions in Xero, Quickbooks, or MYOB.
• Payroll Management: Ensuring employees are paid accurately and on time.
• Tax Preparation: Filing annual returns and helping you pay the right amount.
• Financial Reporting: Providing monthly or quarterly updates on your business performance (like a virtual CFO).
• Business Advice: Offering guidance on how to improve profitability or cut costs.
• Regulatory Compliance: Ensuring you’re meeting industry-specific requirements.

When Should You Hire a Small Business Accountant?

Timing matters when deciding to bring an accountant on board. Here are some signs it’s time to make the leap:

1. You’re Starting a New Business

• An accountant can help set up the right legal structure (e.g., sole trader, corporation, LLC, trust, partnership).
• They’ll establish a clear financial system from day one.
• This prevents future headaches as your business grows.

2. Your Business Is Growing

• More clients, employees, and revenue = more complexity.
• If you’re struggling to keep up with invoices or tracking expenses, it’s time to outsource.

3. You’re Facing Tax Season

• Taxes can be overwhelming, especially for first-time filers.
• An accountant ensures accuracy and identifies deductions, saving you money.

4. You Want Financial Clarity

• If you don’t know where your money is going or how profitable your business truly is, you need an expert.
• Cash flow issues? A small business accountant can help with budgets and forecasting.
• Accountants provide clarity with detailed financial statements and actionable insights.

What to Look For in a Small Business Accountant

Not all accountants are created equal. When hiring one, here’s what to consider:

1. Qualifications

• Check their certifications Look for titles like Chartered Accountant (CA) or Certified Practising Accountant (CPA).
• These credentials ensure they’re properly trained and regulated.

2. Industry Expertise

• Does the accountant have experience with your type of business?
• For example, hospitality and retail have unique financial challenges compared to e-commerce or consulting.

3. Communication Style

• Financial jargon can be confusing. Look for someone who explains things in simple language.
• They should be approachable and willing to answer your questions.

4. Technology Proficiency

• Do they use modern accounting software like Xero, MYOB, or QuickBooks?
• Cloud-based tools make collaboration easier and ensure your data is always up to date.

5. Cost

• Ask for their pricing structure. Do they charge hourly, monthly, or per task / project?
• Balance affordability with the value they provide. Remember, the cheapest option isn’t always the best.
• Small business accounting ranges from $3,000-18,000 per year depending on the services you require (tax, bookkeeping, reports, payroll etc.)

6. Reputation

• Ask for referrals from other small business owners.
• Read online reviews and testimonials (check out their Google Maps listing).
• Look for red flags like missed deadlines or poor communication.

Questions to Ask a Potential Accountant

Before hiring a small business accountant, here’s a list of questions to assess whether they’re the right fit:

1. What services do you offer?
   Ensure they cover everything you need, from bookkeeping to tax advice. Do they also help with strategic business advice?
2. How familiar are you with businesses like mine?
   Experience in your industry is a must-have.
3. What’s your pricing model?
   Get clarity on costs upfront to avoid surprises later. Ask about monthly payments to ease cash flow.
4. How will we communicate?
   Will you meet in person, via email, or through video / phone calls? What is my preferred method of contact?
5. What software do you use?
   Ensure it’s compatible with your existing systems or easy to adopt (we recommend Xero).
6. How do you stay updated on tax laws and regulations?
   This ensures they’re proactive and up-to-date. CPAs and CAs have to complete required CPD each year. Ask what their favourite part of tax or accounting is.

DIY Accounting vs. Hiring a Pro

Still on the fence about hiring a small business accountant? Let’s compare the pros and cons of doing it yourself versus outsourcing.

DIY Accounting

Pros:

• Cost-effective if your finances are simple.
• You’re in control of every detail.

Cons:

• Time-consuming.
• Risk of errors that could cost more in the long run.
• Limited expertise in tax planning or compliance.

Hiring an Accountant

Pros:

• Saves time and reduces stress.
• Minimises the risk of errors and penalties.
• Provides expert advice for growth and savings.

Cons:

• Costs can add up, especially for ongoing services.
• Requires effort to find the right fit.

How Much Does a Small Business Accountant Cost?

Accountant fees vary widely depending on your location, needs, and the accountant’s experience.

Typical Costs:

• Bookkeeping: $60–$100/hour.
• Tax Preparation: $1,500–$5,000 (depending on complexity).
• Ongoing Services: $400–$700/month for small businesses.

While this might seem like a significant expense, you can cut costs where not needed. For example, you might hire your own bookkeeper, work with a business advisor, and have your accountant for tax-time.

A good accountant can help you save thousands in taxes, avoid penalties, and improve profitability.

Accounting Software vs. Hiring an Accountant

Some small business owners wonder if accounting software is a suitable alternative to hiring a professional. Here’s a quick comparison:

Accounting Software

• Examples: Xero, QuickBooks, MYOB.
• Features: Automates tasks like invoicing, expense tracking, and payroll.
• Cost: Typically $40–$100/month.
• Best For: Sole traders or very small businesses with straightforward finances. You’ll still need to reconcile the data, prepare invoices, and process payroll.

Hiring an Accountant

• Manages your cloud accounting for you (bank reconciliations, reporting etc.)
• Offers personalised advice and expertise.
• Manages complex financial tasks and compliance.
• Best for growing businesses or those with unique needs.

For many, the best approach is a combination of both. Use software for day-to-day tasks, and an accountant for strategy and compliance.

Tips for Working with Your Accountant

Once you’ve hired an accountant, here’s how to make the most of the relationship:

• Be Organised: Keep receipts, invoices, and financial records tidy.
• Communicate Regularly: Share updates about your business or any major changes. A monthly or quarterly meeting should be sufficient.
• Set Clear Goals: Discuss your priorities, like reducing taxes, getting an investment property, or improving cash flow.
• Review Reports: Understand your financial statements and ask questions if needed.

Final Thoughts: Is Hiring a Small Business Accountant Worth It?

For most small businesses, hiring an accountant is a worthwhile investment. A great accountant can provide peace of mind, ensure compliance, and help you save money in the long run.

However, it’s about finding the right accountant. Someone who fits with your business. Whether you’re launching a startup, scaling up, or simply wanting to improve your operations, a good accountant can make all the difference.

Want To Know More?

Need help finding a small business accountant in your area? Want the best of the best? Adventure Tax can help. To find out more, book a free call with me here.

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