Do I Need a Special Accountant When I Start a Business?

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Congratulations! You’ve just started a business, filed the necessary paperwork, and you’re starting to work with clients. But one question crosses your mind, especially as tax season approaches: do I need a special accountant now? Truthfully, it depends! Accountants can be incredibly resourceful for business owners, helping with anything and everything from financial record-keeping to tax preparation and so much more.

If you’re eager to learn more about what accountants do for startups and the differences between general accountants and certified public accountants, then you’re in luck. In this article, we’ll explore more about accountants and how they can help you, as well as some alternatives you might want to pursue if you don’t feel ready to invest in their support for your business.

Understand the Role of an Accountant for New Businesses

As a business owner, accountants can be an invaluable partner to ensure the financial stability and growth of your company. It doesn’t matter what industry you’re in, what products or services you sell, or even how much money you make every single year. Having someone on your side who understands financial reporting and can prepare these documents is a real asset. However, as a start-up, understanding the role of an accountant for new businesses is absolutely important.

What Does an Accountant Do for Startups?

Startups can benefit from accountants just as much as companies that have been around for dozens of years. With a startup, an accountant completes various tasks, from financial record-keeping to tax preparations. Here’s a look at what an accountant can do for your startup:

Record-Keeping and Bookkeeping: Accountants are trained in financial record-keeping and bookkeeping, helping you keep your books updated and accurate every quarter.

Prepare and Analyze Financial Statements: Stuck on a particular decision and want to know the risks? Accountants can prepare and analyze the numbers so you can make informed decisions.

Provide Tax Insights: Many accountants can also work with your startup to help you understand your tax obligations and the potential available savings you could enjoy.

Financial Planning: One of the best reasons to work with an accountant as a startup is because of their ability to create financial plans aligned with the company’s future growth.

Advice for Compliance: If you’re unsure of the financial regulations related to your business, that’s where an accountant comes in. They can provide unparalleled advice to help you navigate the business world with ease!

How an Accountant Can Help You During Business Formation

If you’re still in the process of setting up your business, accountants can still assist you in more ways than one. Not only can they guide you on the right structure for our company—whether you choose a corporation or LLC—but they can also help you set up accounting software that fits your business’s needs. Furthermore, they can help with initial business registration and licensing requirements and even provide scenario analysis for various business models and potential profitability.

They can even offer projections for your initial cash flow and capital needs. For example, if you’re opening up a bakery in your town, an accountant can provide you with a detailed projection of what you can expect to make, how much money you’ll need to start, and how to legally structure your company before you even open your doors.

Types of Accountants for Business Owners

Working with an accountant can benefit you greatly as a new business owner, but you also have to know which type of accountant to work with. There are general accountants and certified public accountants (CPAs), as well as tax accountants and small business accountants. Let’s explore the differences between them.

General Accountants vs. Certified Public Accountants (CPAs)

The differences between general and certified public accountants refer mainly to their daily tasks and educational or even licensing requirements. If you’re looking for someone to handle typical day-to-day financial tasks or basic financial support, then a general accountant is the perfect fit for you. However, CPAs can provide an additional level of support due to their required licensing and necessary exams, which prepare them to help with audits, IRS representation, and more.

When to Hire a Tax Accountant vs. a Small Business Accountant

Aside from general accountants and CPAs, a small business owner like you might also consider hiring a tax accountant or a small business accountant. Tax accountants are fantastic if you’re looking for help with issues like tax preparation and understanding your potential financial savings. Tax accountants can be especially helpful if you are in the midst of challenging tax situations or have large transaction volumes. However, if you want more variety in your financial support, small business accountants can help with budgeting, bookkeeping, and ordinary financial oversight so your business keeps running without any hiccups.

What Are the Benefits of Hiring a Specialized Accountant?

You might be wondering: why on earth do I need to hire a specialized accountant? Isn’t a general accountant good enough for my startup? Sometimes, hiring a general accountant gets the job done. However, there will be times when you need a specialist’s help to understand issues like tax laws, accounting systems, or even proper business structuring. Here are some benefits of hiring specialized accountants instead of a general accountant, even as a startup:

Get Help Navigating Tax Laws: General accountants know tax laws, but specialized accountants work with these regulations day in and day out. You’ll want someone to keep you apprised of the latest tax codes and changes, as well as what tax credits and deductions are best for you based on your industry sector. Working with a tax accountant could be the difference between a sizeable tax bill or a smaller tax obligation that’s turned in on time—if not early!
Set Up a Proper Accounting System: Specialized accountants are also fantastic if you’re looking for help with customized accounting software tailored to your business needs. For example, let’s say that you have a retail business and want an accounting system fit to categorize and organize all of your expenses and income. A CPA can help you implement systems for accounts payable or receivable and inventory tracking, even integrating it with your banking or financial software.
Get Advice on Business Structuring: Many accountants who specialize in a particular area are able to provide you with deep insights into the benefits of specific business structures, from S-Corps to C-Corps to LLCs. Working with a general accountant means you can’t get this sort of insight, but with a specialized accountant, you’ll know how to register your company to receive the best tax benefits and minimize tax liabilities where you operate.

Key Financial Tasks for a New Business Accountant

Now that you’ve likely decided on the business accountant you’ll work with, what will they do on a given day? Even as a startup, there’s plenty that they have to worry about, from preparing your business taxes to managing and budgeting your cash flow and assets. Here are some of the tasks that you can expect your business accountant to do for your startup:

Preparing and Filing Business Taxes: This is one of the most critical tasks that any accountant completes all year round. No matter what business you run, your accountant will need to compile your documentation and submit your federal and state taxes. They’ll even do research and provide you with strategies to reduce taxable income, such as using certain deductions.
Managing Cash Flow and Budgeting: This daily task will help your business identify any potential financial risks or opportunities. Using a combination of software and innate knowledge, accountants can provide you with detailed budget plans, cash flow forecasting, and planning services to ensure you stay on track to meet your goals.
Assisting with Payroll and Employee Benefits: With the right business accountant, you’ll get payroll and employee benefits support. This not only helps you maintain compliance with payroll regulations and tax withholdings but also provides you with insights to plan for retirement packages, health insurance, and other benefits. They’ll typically use payroll software to help you streamline employee payments.

Do You Need an Industry-Specific Accountant?

As a startup owner, you might consider getting an industry-specific accountant. While it can be helpful to find someone specific to your sector—for example, real estate, construction, or even manufacturing—it’s not always necessary to find someone so specific so early on in your business’s journey.

Specialized knowledge matters most for those who may have specific or unique regulations. For example, let’s say that you run a healthcare company. Hiring an accountant with experience in this area could help you stay within HIPAA, Medicare, and Medicaid regulations. On the other hand, retail companies also might want a specialized accountant who understands inventory management, POS systems, and sales tax compliance laws. Even technology-specific accountants might be a good idea so you can capitalize on R&D tax credits and abide by intellectual property laws.

There are pros and cons of hiring a niche accountant. On the one hand, you enjoy expert knowledge, tailored advice, and a deeper understanding of industry metrics, which is necessary if you’re in an industry like healthcare or tech. However, the challenges are—especially for startups—that the cost of hiring this professional will likely be higher, and it’s harder to find some industry-specific accountants who can help you out.

How to Choose the Right Accountant for Your Business

Choosing the right accountant for your business involves more than just finding someone specific to your industry or someone who fits your budget. Ultimately, it’s about finding the right person who fits your needs and is someone you can envision working with closely as you ensure your financial stability. Here are some tips to help you ensure you find the right person to take on your accounting needs!

1: The Top Questions to Ask When Interviewing Accountants

Hiring an accountant should be treated like hiring any employee on your team, but you also have to ask specific questions to ensure they have the right experience and can mitigate challenges. For example, you might ask them the following questions:

What experience do you have in my industry?
Can you provide an example of a financial challenge or challenges that you have helped clients resolve?
How do you keep up-to-date with the latest accounting trends and regulations?
If they can answer these questions confidently, then they will likely be a good fit for your company!

2: Ensure You Verify Their Credentials and Certifications

The last thing you want is to hire someone who lacks the licenses and certifications required for the job. You’ll want to confirm their certifications—whether they be CPAs, CMAs, or other licensed accountants—through the appropriate professional bodies and check the legal status of their licenses through regulatory boards before you say yes to the perfect accountant for you.

3: Evaluate Their Experience with Small Businesses

Chances are, you’re looking for someone who can handle startups and small businesses rather than someone who may have worked with large conglomerates. Ask for references from their previous or even current clients, determine if they can handle small business challenges, and don’t be afraid to ask them about their approach to financial problem-solving. For example, you might give them a scenario you face as a retail storefront and ask them to tell you how they would handle it.

Alternatives to Hiring an Accountant

If hiring an accountant right now is not in the cards, that’s okay! There are plenty of alternatives that you can pursue so your business stays financially healthy until the time comes to hire a professional. Here are some options you might be interested in:

Use Accounting Software for Startups: Fortunately, there are many different applications for DIY accounting solutions. QuickBooks, Xero, and FreshBooks are great starting points that can automate basic bookkeeping tasks, create financial reports, and make tax preparation and filing a breeze.
Hire a Bookkeeper: It’s essential to know when a bookkeeper may be enough. They can help you manage daily financial transactions, reconciliations, and other financial needs. These are great professionals to hire to support your operations, especially if you have a small budget, and they can even complement your existing accounting services!

As you can see, you don’t have to hire an accountant if your startup isn’t ready for that investment. With these alternatives, you can still take care of your financial reporting and budgeting until you’re ready for a specialized accountant to take care of it for you.

Contact Us Today to Find a Financial Professional for Your Startup

Managing your finances can be overwhelming, but the right accountant can make it simple. Whether you need help with tax planning, bookkeeping, or business financials, a trusted professional can provide the guidance you need. Click here to connect with a qualified accountant and take the first step toward financial clarity today.