I often get asked the question of “When do I hire an accountant”. While this is somewhat of a loaded question, the answer is simple. If you are asking the question or thinking about it, chances are you probably need one and should have already contacted one.
I’ve seen and worked with a lot of companies that have tried to do their own accounting. It’s not pretty. In these situations, we often have to go back to redo their work and re-file taxes, resulting in a greater cost for the company than if they had just outsourced their accounting from the get go.
Even so, many early-stage startups continue to be on the fence about hiring an accountant to provide financial support. In the early stages, startups are busy trying to bootstrap, stretch limited funds, and cut costs wherever necessary. One of the ways you, as an early-stage entrepreneur, may try to save money is by choosing to manage your own accounting and finances. If you’re an experienced accountant, this makes sense. If not, this could be a serious mistake that negatively impacts the potential growth and success of your business.
I’m not recommending that you run out and hire a full-time accountant. The better, more cost-effective plan is to save on staffing costs by outsourcing your accounting services. That way you can pay for only the exact level of day-to-day transactional work and accounting support that your company needs.
So What Does an Early-Stage Accountant Do?
Any accountant you contract with should be able to provide a wide range of services to support you through the early stages. Here’s an abridged list of services that accountants provide when you’re:
Up and running:
Growing your business:
Benefits to Outsourcing Your Accounting Function
As you can see from the list of functions above, your accountant does much more than just sit around with a green eye-shade tallying numbers. An outsourced accounting firm will give you much-needed support in many areas of your business while also providing the following benefits:
Focus on your core business. Perhaps the most important reason to hire an accountant is so that you and your early employees can focus on building your product, developing relationships, creating partnerships, and marketing and sales. In other words, you have core business versus non-core business. In the early stages, especially, you need to learn to separate core from non-core and focus on your core business, without worrying about other elements.
High-quality financial information. When you’re trying to raise equity funds or obtain debt or reach out to potential investors, you need to have the kind of high-quality financial information that outsourced accountants provide. These kinds of financial statements are also essential for tax reporting purposes and providing updates to your investors. Equally important, the financial information provided by your accountant will give you great insight into the nature of your business which is invaluable in developing effective business strategies.
A valued business partner. Outsourcing your accounting function also gives you the advantage of having another trusted business partner. Outsource firms have extensive expertise working with early stage start-ups. This sort of expertise and experience can be invaluable for your company when it comes to raising funds, financial planning, negotiating term sheets, structuring deals, financial reporting, etc.
Contact us today for a free initial consultation to find out more!