Tired of spending hours buried in financial documents and tax forms, struggling to keep up with your small business's accounting needs? It may be time to consider hiring an accountant. Let's take a closer look at the hidden benefits and true cost of bringing a professional on board.
What to Expect When Paying for Accounting Services
The average accountant in Canada costs between $750-$2,000, depending on the size of your business and the support you are looking for. As a business owner - cost matters, but we also want to make sure you have the full picture of what services accountants can offer for the price:
1. Bookkeeping: keeping an organized log of revenue and expenses to optimize deductions and help you get valuable insight into the financial health of your business.
2. Tax prep: filing your taxes so you're good with the government while not overspending on taxes either.
3. Support: Your accountant should be the closest person to your business finances so if you need a gut check on financial decisions they should be your go to. Whether you're expanding locations or taking a loan your accountant can offer support in making informed decisions.
Based on your needs you can find an accountant that helps with the above at varying levels.
Hidden Costs of Not Getting an Accountant
Along with the cost in dollars, savvy business owners like you also think about the cost of not doing something too.
1. Time Wasted: One of the hidden costs of not getting an accountant is the time spent on accounting tasks by yourself or by your team. As a small business owner, your time is valuable, and every hour spent on non-core activities is an hour taken away from growing your business. By hiring an accountant, you can free up your time to focus on strategic initiatives that drive revenue and profitability.
2. Errors: Another hidden cost lies in the risk of errors and non-compliance. Without the expertise of an accountant, you might inadvertently make mistakes in your financial records or overlook tax regulations. These errors can result in penalties, fines, and even legal repercussions. Investing in professional accounting services helps mitigate these risks, ensuring the accuracy and compliance of your financial operations.
3. Savings Missed: Lastly, the opportunity cost of not having an accountant can be substantial. Without professional guidance, you may miss out on tax-saving opportunities, fail to optimize your cash flow, or make poor financial decisions. These missed opportunities can have a long-term impact on your business's growth and profitability.
Considering these hidden costs, not hiring an accountant can be a costly choice for small businesses.
Calculating the True Cost of an Accountant
To accurately calculate the true cost of an accountant for your small business, let's take a look at all the quantifiable savings to consider:
1. Time savings: Estimate the number of hours you or your team currently spend on accounting tasks and assign a monetary value to that time. Compare this to the cost of hiring an accountant who can handle these tasks more efficiently, freeing up your time for revenue-generating activities.
Example: Imagine you spend 10 hours per week on accounting tasks, time that could be better allocated to revenue-generating activities. By hiring an accountant to efficiently handle these tasks, you can redirect those 10 hours towards generating additional revenue. Assuming an average hourly revenue of $100, this amounts to $1,000 per week or $52,000 per year in additional revenue.
2. Risk reduction: Assess the potential costs of errors, penalties, fines, and legal consequences that could arise from handling accounting tasks without professional expertise. Consider the dollars saved by avoiding these penalties altogether.
Example: Without an accountant, the risk of errors and non-compliance increases. In the event of a tax audit, potential penalties and fines could reach $20,000. However, with an accountant ensuring compliance and accuracy, you avoid 20,000 in costs altogether.
3. Tax savings: Accountants possess deep knowledge of tax laws and regulations. They can identify deductions, credits, and strategies to reduce your tax liability significantly. Compare that to the cost of a straight tax on all revenue before these deductions.
Example: Suppose your small business has been missing out on eligible tax deductions due to a lack of expertise. By hiring an accountant, they identify deductions that result in $10,000 in tax savings annually. Over a five-year period, this amounts to $50,000 in savings, offsetting the cost of the accountant's services.
4. Financial insights: Analyze the value of the financial reports, forecasts, and recommendations provided by an accountant. Consider the impact of these insights on your decision-making process and long-term business growth.
Example: Let's say your revenue $200K/year but you just aren't seeing that cash. After analyzing your cash flow statements, your accountant suggests implementing a more efficient invoicing system, resulting in a 20% reduction in outstanding receivables. This can translate to $10,000 of additional cash flow within one quarter alone. These improvements directly contribute to your bottom line.
By considering these factors, you can calculate the true cost of hiring an accountant and determine whether the investment aligns with your business's financial goals and priorities.
How to Find the Right Accountant for Your Small Business
Now that you understand the importance, cost, and benefits of hiring an accountant, you may be wondering how to find the right professional for your small business. Here are a few steps to guide you in the selection process:
1. Define your needs: Start by identifying the specific accounting services you need. Consider factors such as:
- Bookkeeping - monthly vs. weekly
- Financial reporting needs - basic (e.g. P&L, Balance sheet) vs. advanced (e.g. Cost/project, inventory valuation)
- Industry expertise - niche vs. general
- Tax preparation and planning needs
4. Evaluate communication and collaboration: Effective communication and collaboration are essential for a successful partnership with an accountant. Ensure that the accountant understands your business goals, communicates clearly, and is responsive to your needs.
For example, we guarantee a response within 48 hours but usually get back to you in less than an hour. Don't believe us? Test it out 😉 - reach out here, and we'll get back to you in less than 15 minutes on a business day.
2. Seek recommendations: Ask for referrals from fellow business owners, colleagues, or industry associations. Recommendations provide valuable insights into an accountant's reputation, reliability, and expertise. In case you were curious - here's what people are saying about us 👀
3. Consider fees and affordability: While cost shouldn't be the sole determining factor, it's important to evaluate the fees of potential accountants and ensure they align with your budget.
Most accountants charge hourly, which works if you just want your taxes filed but can rack up a big bill if you want to tap into bookkeeping, reporting, and support. Some accountants (ahem... like us) offer a fixed rate which usually makes more sense for owners who are looking to grow their businesses and get the insights they need to do so.
By following these steps, you can find an accountant who meets your specific requirements and forms a valuable partnership that contributes to the financial success of your small business.
Conclusion
Unlocking the hidden benefits and calculating the true cost of hiring an accountant for your small business is a strategic decision that can have a profound impact on your bottom line and long-term success.
When searching for the right accountant, define your needs, seek recommendations, judge communication and consider fees. By finding the right professional, you can establish a partnership that supports your business's financial goals and contributes to its long-term success.
So, if you're ready to take your small business to the next level, consider hiring an accountant. The true cost may be more affordable than you think, and the rewards can quickly outweigh costs.
Btw - If you're looking for a place to start, check us out, we'd be happy to chat and point you in the right direction.