Hiring an Accountant – Can I Afford It?

Dorota Haskins, Chartered Professional Accountant |

When it comes to hiring an accountant, many small business owners often ask themselves whether they can afford “that kind” of expense.

Money is often tight in the early days of running a business, and you need to be careful about where you spend that money. But, when it comes to the financial success of your business, what you should be asking yourself is “At what point does hiring an accountant pay for itself?”

I would agree that very small businesses with very simple financial matters may not need an accountant. But, as those businesses begin to grow, so does the complexity of their financial affairs. In these situations, hiring an accountant is less of an expense and more of an investment.

However, far too often business owners think they can do it all. And this can end up being a very costly mistake down the road.

A good accountant offers much more than just tax preparation.

In this post, I will go over:

the typical tasks of a small business accountant & benefits
benefits you can expect from hiring a small business accountant
how much a small business accountant can cost
how to calculate whether it’s worth hiring an accountant for your business
how to find a good (and legitimate) small business accountant

1) Accountant Duties & Benefits of Hiring an Accountant

Taxes

I’ll start with the obvious.

This is one of the main tasks that come to mind when small business owners think of hiring an accountant.

So, if you are one of those business owners who does your own bookkeeping, you may only need the help of an accountant once a year.

An accountant should be current on all tax rules and be able to point out any deductions you may have missed but are eligible for.

Beyond tax preparation, a good accountant can advise you on tax implications of business decisions throughout the year. Or advise you on structuring your business or transactions differently, to be more tax-efficient.

But, taxes are only a snippet of what an accountant does. After all, if they only prepared taxes, there would be a lot of unemployed accountants for 9 months out of the year!

Bookkeeping Services

Many accountants or accounting offices will also offer bookkeeping services for small business owners. As your business grows, you may not be able to keep up with the day-to-day finances of your business. This is when it would be a good time to reach out to an accountant. The benefit of having your accountant complete your bookkeeping is that they can advise you on issues that arise when they arise rather than at year-end.

While bookkeeping isn’t necessarily a difficult task, it can be time-consuming. For this reason, accountants don’t charge their typical accounting rate, they would charge a market-based equivalent bookkeeping rate to perform such duties on your behalf.

Forecasting & Planning

Some fundamental tasks by every business owner that are often overlooked include forecasting and planning.

For example, cash-flow forecasting can provide you with a long-term view on when and where cash is being spent. It can help identify whether you will have enough to cover day-to-day operational expenses at any given time.

Business planning is crucial to the long-term viability of any business and if you’re not comfortable with financial projections, an accountant can do it quickly and effectively.

Financial Statements

Let’s say you’re looking to get a loan, the bank is going to require financial statements to show the viability of your business. Can you prepare these yourself from the books you’ve been maintaining?

Have you ever heard of consolidated financial statements? They include the Balance Sheet, Profit & Loss Statement and Cash Flow Statement.

An accountant can help you produce those statements from your bookkeeping records. They can also ensure that your bookkeeping system is set up correctly.

Business Consulting

An accountant can help you with a varying number of business services including:

  • incorporation
  • software selection, installation, set-up & training
  • process improvements
  • policy & procedure development
  • general analysis or problem-solving advice

By hiring an accountant, you are gaining a trusted advisor who can help grow your business. 

2) How Much Does it Cost to Hire an Accountant?

Costs to hire an accountant can vary.

There is no “set” price as each accounting firm differs in the services they provide.

Your fee will depend upon:

  • your location
  • size of your business
  • type of service
  • size of the accounting firm

However, to give you a rough idea of what to expect, here are a few examples.

In Canada, hourly fees can range from $100-$400/hr. While that may seem like a lot, it may not take that many hours to fulfill your requirements.

Many accountants now provide fixed fee pricing, enabling business owners to manage their cash flow more effectively.

Ultimately, you can guesstimate your costs, but it’s best just to get a few quotes.

3) Is it Worth it?

How do you know when it’s worth hiring an accountant?

Go through the steps below to determine whether hiring an accountant is worth hiring for your business.

#1 How much time do you, a member of your family or staff spend on accounting tasks each month? Don’t forget to factor in fixing of mistakes, communicating with government agencies, etc.

#2 Decide how much your time is worth. Assign an hourly rate to value your time.

#3 Calculate your current cost.

For example, if you spend 15 hours a month on accounting tasks, and you value your time at $50/hr, then your cost is $750/month.

Then, if your accountant is charging less than $750/month, it’s worth it.

4) How to Find a Good (and Legitimate) Accountant

Whether you have decided already to hire an accountant or need to know what to look for in the future, here are some basic tips.

Start with the Chartered Professional Accountants (CPA) Association for your province. Contact them by phone or search online for a CPA firm.

Talk to other small business owners – they may be able to recommend a good accountant.

Always make sure that the accountant you hire is properly qualified and in good standing with the CPA Association. This will help ensure that both you and your business are in the hands of a professional.

Once you’ve got a list of a few accountants, contact them for quotes. Don’t forget to ask them a few questions to ensure that they are the right fit for you.

You will be working with your accountant for many years, so make sure it’s a relationship that’s the right fit from the start.

Here is a link to a few great questions to ask when hiring an accountant. Feel free to add your own or modify the included as required to suit your business.

Other Noteworthy Benefits of Hiring An Accountant

An Accountant can free up time that you can use for other business activities – such as focusing on growth. It will also provide you with more time freedom and reduce stress. 

The longer you work with an accountant, the more valuable their expertise becomes as they get to know you and your business on a personal level. 

They can guide you to make informed business decisions that foster growth and profitability. 

Having an accountant means you will have access to a valuable source of information. All CPAs in Canada must complete a minimum of 40 hours per year in professional development. This means, that your accountant should be current on all new and emerging accounting and tax rules that may impact your business.

Final Thoughts

Whether you are just starting a business, are newly incorporated, or have been running your business for some time, an accountant is a good investment.

The earlier you partner with a good accountant, the better for you and your business.

Word of mouth advertising is the best compliment any accountant can get, so when you find someone that’s worth every penny, pass along their name – they will surely appreciate it!

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