Should my Startup get an Accountant?

Most small businesses need financial help – however, hiring a professional can be a challenge with a limited budget. Obtaining the services of an accountant can be a highly worthwhile investment. Learn more about gauging your startup’s need for using an accountant to ensure your business can scale effectively.

When Should Your Startup Seek Financial Help?

Do you find that you are spending too much time tracking expenses rather than focusing on growing the business? Are you having trouble making financial decisions? Well these are very common and legitimate reasons to seek startup accounting services!

A competent part-time accountant can manage accounts payable, accounts receivable, and stay on top of the monthly closing of the books. They can also oversee payroll and employee expense reimbursements. With relatively low fees and billed hourly, a part-time accountant or bookkeeper is the most cost-effective accounting support option available to startups. If money is especially tight and needs to be fairly limited, this isn’t a bad option, at least in the short term.  Historically, some smaller shops have one person to handle all of these activities, however a more modern approach is an accounting, finance, and back-office firm that has experts in each of these departments (accounting, payroll, tax, AP/AR).  This ensures you are working with a specialist in critical financial areas.

When Does Your Startup Need an Accountant?

There’s no hard-and-fast rule as to when you need to hire an accountant. This will depend on the nature of your startup, your personal skills in dealing with numbers, and the time and resources you have available. For most founders, getting a competent and trustworthy accountant is one of the first things on their to-do list, while for others it comes later down the line. Whichever route you go, it’s never too early to assess your situation and consider when the right time might be for you to bring an accountant on board.

Remember that accounting work is additive, which means if you postpone monthly bookkeeping until tax time, or delay state or federal tax registrations, you will have additional cleanup work, often on a tight deadline.  Much like keeping a clean house or organized business, staying on top of your company’s financial health is an investment that helps position your company for financial success in the future.

What Does a Bookkeeper Do?

Generally bookkeepers are tasked with processing and categorizing day-to-day transactions and being familiar with the accounting cycle of the business. A bookkeeper is responsible for recording and organizing a company’s daily financial transactions so that comprehensive financial statements can be generated for the accountant. Other common functions of a bookkeeper include processing payables and receivables, bank reconciliation, payroll, managing bank feeds, etc.  Accountants then analyze the data and information that the bookkeeper has collected and use it to perform their role for the company.

What Does an Accountant Do?

An accountant has a much broader overview of your business’s financial performance. They’ll achieve this by reviewing and analyzing all the information that the bookkeeper provides. Typically, an accountant will look after the following:
  • Setting up your accounting software and establishing processes, ideally in line with GAAP or IFRS
  • Reviewing and confirming the accuracy of bookkeeping
  • Assisting and facilitating tax planning and preparing financials for tax returns
  • Consultation and advice on financial decision making, tax implications, asset management and planning a financial strategy
  • Business planning
  • Payroll issues
  • State and local compliance
For startups and small businesses, some bookkeepers will often cover some accounting tasks – or accounting firms will offer bookkeeping as an add-on service. And with the help of modern accounting software, previously complicated accounting tasks have become a lot easier to do. To remain competitive and flexible, ensure that your accountant is using cloud-based tools.  Online software allows for continual updates (to the latest version), easy access to your financial data on the go, and the ability to integrate data (such as payroll data linking to your accounting software) which helps avoid manual errors.

How Much Do Startup Accountants Charge?

The cost of startup accounting services depends on the provider. Some pricing models include hourly rates, fixed flat fees, or percentages of overall revenue or expenses.  The cost of a bookkeeper or accountant is usually directly proportional to your company’s transaction volume, the complexity of revenue or costs, and any intercompany or cross-border structure.  In general, as your business becomes more complex, more advanced accounting knowledge is required, so the price of a competent accountant also increases. What’s most important is that the accountant understands your business, its goals, and how they can help achieve them. The cost of an accountant also relies on the organization of your bookkeeping. In order to get good outputs, there first must be reliable inputs.


The typical hourly charge of an accountant ranges based on level – depending on geographical area, a staff accountant (someone who can do basic bank reconciliations, prepaids, and expense classifications) charges between $40-80/hr, while a senior accountant (who can also assist with revenue recognition or deferred revenue) may range from $70-$130/hr, and an accounting manager who can advise on technical accounting matters and audit prep may range from $120-200/hr.  Specialists in revenue recognition, advanced accounting topics, or other audit support may exceed $300/hr. Pricing varies on the type of work, size of firm, experience of the accountant, and location.

Helping Your Startup Hit Major Financial Milestones

From your founding day to eventually selling your startup, financial milestones are more complex than simple bookkeeping. An accountant can help you come up with a detailed business plan that can help you achieve goals like attracting investors or obtaining the loan you need for startup costs. Here’s a great place to leverage a larger firm’s FP&A or Advisory department to help build a financial model, budget, or sales and growth forecasts.  For example, at Finvisor, our advisory team pairs with our accounting team so you can get experts in building models for valuation or annual budgets, along with CPA’s and audit-ready financials.  An accountant or their associate advisory team can help you come up with realistic projections for both expenses and revenue, helping avoid costly mistakes that brand-new business owners can sometimes be prone to making. 

 

An accountant can provide you with valuable metrics to monitor your business’s progress, such as your ongoing ratio of revenue to salaries and other expenses and the approximate ROI you’re getting for marketing expenses. Many accountants can share this info with you via the cloud, saving you time from meeting in person and allowing you to check on progress whenever and wherever you choose.

See Your Startup From a New Perspective

Although you may believe you have a good idea about the state of your startup, an accountant helps to have another pair of eyes on this. Working with an accountant will help you highlight and avoid unnecessary expenses, identify where you are losing money, and strategize for growth. 

Your accountant can put the financials in order and run reports showing where you stand each month, where the funds are going, and how your efforts are paying off (or might need improving upon). They will help provide fluctuation analysis and point out areas to reduce expenses or potentially grow the business. They can also advise you on whether taking out a business loan is a good idea or not. 

Whether you hire an accountant on a regular monthly basis, check in with one a few times a year, or just during tax season, the investment will more than pay for itself and will help you build your business.

Taking The Next Step for Your Startup

Although you may think you’re too small for an accountant and are comfortably managing alone, seeking occasional advice is still a good idea. It may cost you a few hundred dollars, but that’s a small investment considering the impact an accountant can have on your small business. If you want to be among the 89% of business owners who see a bump from working with a financial pro, then it’s best to start working with a qualified accountant immediately.

Reach out to our expert team today to see how we can help your startup with its accounting needs.

*This blog does not constitute solicitation or provision of legal advice and does not establish an attorney-client relationship. This blog should not be used as a substitute for obtaining legal advice from an attorney licensed or authorized to practice in your jurisdiction.*

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