Does Every Small Business Need an Accountant, or Can You Sometimes Wing It?

Updated on November 18, 2020
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Maybe you’ve just started your business, and you’re wondering if you need to hire an accountant. Or perhaps you’re still in the planning stages of a new venture, and you’re deciding whether or not you need someone dedicated specifically to your business’ accounting, before going all in.

If you ask an accountant whether or not you should work with someone to help you with your books professionally, you know the answer will be yes.

But you can trust that they’re not saying “yes” for their own benefit. Most successful business owners who work closely with an accountant will tell you an accountant is an absolute must. In fact, results from a study conducted by Intuit, the maker of QuickBooks, TurboTax, and other financial software packages, show that 89% of small businesses say they see more success with an accountant or an advisor.[1]

Still, it’s reasonable to wonder if every single small business really needs an accountant. Isn’t hiring an accountant overkill if your business is very small? Can you just “wing it” until you get to a certain revenue level?

The answer is a resounding, “Yes!” And also, “No!” We’ll explain… because that doesn’t make any sense. But it will.


When to Hire an Accountant

Most accountants will tell you they could have saved their small business clients a lot of time, money, and headaches. That is if those clients hadn’t waited so long to ask for help. Bottom line is that there are several key times in the course of your business when you don’t want to wing it without an accountant.

Forming Your Business

The formation of your business is one of those key times. An accountant can:

  • Help you write your business plan. If you’re not looking for funding, though, do you even need a business plan? If you’re planning to lease office, retail, or manufacturing space, your landlord may require one. Plus, it’s a good idea to have a direction and goals for your business rather than playing it all by ear.
  • Advise you on your business’s entity structure. Although most businesses start out as sole proprietorships, your particular business type or personal financial situation might mean another entity structure makes more sense. At the very least, you should probably consider creating an LLC as a freelancer for legal and financial protection. An accountant can help you with this!
  • Help you get all the appropriate licenses. Sales tax permits, business licenses, employment accounts… oh my! Every state—and in some cases, every city—has different requirements for business. And different industries have different requirements, too. An accountant can help you untangle all of the red tape and make sure you start your business on the right (read: legal) foot.
  • Help you set up your bookkeeping software. At the risk of losing my bookkeeper’s membership card, I’ll let you in on a little secret: Most small businesses don’t need to engage a bookkeeper on an ongoing basis right away. There comes a point where you’ll want to outsource or delegate your small business bookkeeping, but up until that time you can probably handle your own bookkeeping and hire a bookkeeper to do periodic reviews of your work.

That said, you don’t want to try to set up your own business accounting software, no matter how easy that software seems to be. An accountant can help you set up your chart of accounts correctly and might even train you on how to use your software, especially if they’re a QuickBooks ProAdvisor. And if your accountant doesn’t offer this service, they probably know a bookkeeper who does.

Compliance and Tax Issues

Even if your business plan is written, you have all the required permits and licenses, and your bookkeeping software is new and shiny and ready to go… you’re not quite ready to go forward without an accountant.

There are still dozens of compliance stumbling blocks to overcome. Don’t try to wing it without an accountant if you have:

  • Complex sales tax issues. Sales tax compliance in the US is quickly becoming a nightmare. If you’ll be shipping your products out of state—or in some cases, even within the same state—you’ll want to make sure you are in compliance with all the applicable tax laws. There are apps to help with this on an ongoing basis, but you’ll want an accountant to help you get everything set up.
  • Complex payroll issues. Wage and labor compliance issues can sink even the most profitable businesses. As with sales taxes, there are apps and programs that can help you with compliance on an ongoing basis, but you’ll want an accountant to look over your shoulder at least quarterly.
  • Other reporting requirements. These can be requirements for creditors or licensing agencies. Even those complex tax issues mentioned above can lead to other tax liabilities in various states. If you are required to report on your financial position for credit or credentialing, or if you do business in more than one state, you’ll want to continue working with an accountant.

When You Can Go at Things Alone

Now you can DIY your accounting, right?

Well, sure. But do you really want to? Remember that statistic that 89% of small businesses credit higher success to working with an accountant? 89% is a big number. So, although you can run your small business without hiring an accountant, you should really consider all of the other benefits you’d gain by joining the vast majority of business owners who partner with a finance professional—and reap the rewards.

Why You’d Want to Partner with An Accountant Year Round

Most accountants want to speak with their clients well before the end of the year. Remember, tax time is too late to start planning for your small business taxes.

But tax planning isn’t the only reason accountants want to meet with their clients before the end of the year. There are certain compliance issues—such as payroll tax underpayments—that are much easier fixed before the final reports for the year are filed.

How Accountants Can Help Every Small Business

If your business is growing—and we certainly hope it is!—meeting with an accountant quarterly can help in a number of ways. Quarterly meetings with an accountant can help you make sure:

  • You’re growing smart. Believe it or not, growth can sometimes tank your business. Regular meetings with an accountant can help you avoid growing too fast or in the wrong way.
  • Your quarterly tax payments are sufficient. As your income increases, so does your tax liability. The estimated tax payments you started with may not be sufficient if you experience a significant surge in business. Regular meetings with an accountant can help you avoid a nasty underpayment surprise at tax time.
  • You can see past your own blind spots. Although small business owners know their businesses better than anyone, sometimes it’s hard to see the forest for the trees. An accountant can help you take a big picture view of your business, which is vital for continued growth.


When It’s Actually Okay to Wing It

Sure, we’ve just spent the last however-many words telling you that there’s basically no situation in which you won’t want to have a year-round relationship with a certified personal accountant. And we stand by that! Almost always, at least.

There are a few exceptions to the rule when you probably can manage things on your own… You might not need an accountant if:

  • Your business is a hobby. If your “business” is really a hobby that brings in a little bit of cash on the side, you probably don’t need an accountant. You still have to keep track of your income and expenses for tax-reporting purposes, though. A simple spreadsheet can suffice for this.
  • You are a freelancer. If you are a freelancer with only a few clients, you can probably wing it without an accountant. As is the case with a hobby business, you do need to keep track of your income and expenses. Don’t rely on 1099s to report your income for the year, and avoid the temptation to “guesstimate” your expenses.<
  • Your tax situation is extremely simple. If your business is a sole proprietorship and your personal tax situation is simple, you might be able to wing it without an accountant, especially if you understand the accounting formulas and tools at your disposal.  If you decide to go this route, though, make sure to use the best self-employed accounting software.

Now, Go Find a Small Business Accountant

Every small business benefits from working with an accountant, but it’s not always absolutely necessary. Even if you decide to wing it without an accountant, seeking occasional advice is still a good idea. It might cost you a few hundred dollars, but that’s a small investment in light of the impact an accountant can have on your small business.

And if you want to be among the 89% of business owners who see a bump from working with a financial pro, then start your search for an accountant now.

Article Sources:

  1. “Why CPAs Should Offer Small Business Advisory Services
Billie Anne Grigg

Billie Anne Grigg

Billie Anne Grigg is a contributing writer for Fundera.

Billie Anne has been a bookkeeper since before the turn of the century. She is a QuickBooks Online ProAdvisor, LivePlan Expert Advisor, FreshBooks Certified Beancounter, and a Mastery Level Certified Profit First Professional. She is also a guide for the Profit First Professionals organization. 

Billie Anne started Pocket Protector Bookkeeping in 2012 to provide an excellent virtual bookkeeping and managerial accounting solution for small businesses that cannot yet justify employing a full-time, in-house bookkeeping staff.

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