When to Hire an Accountant for your Small Business

Last Updated:
August 2, 2022

Hire an Accountant for your Small Business

As a small business owner, you likely don’t have an accountant yet. This is usually due to cost, as it can get expensive. Instead, many small business owners opt to use bookkeeping and accounting software like Xero or Quickbooks. However, the amount of time you spend on bookkeeping adds up, and it may be best to hire an accountant for your small business instead. Below are some insights into when you should hire an accountant and the benefits your small business will experience.

Accountants vs Bookkeepers

The first consideration when deciding you may need help with accounting is to decide what financial services you need. Most accounting firms and individuals offer business consulting and various financial services. However, the certifications they hold and experience levels may vary. Here are the most common financial experts and the differences between them.


A bookkeeper is responsible for keeping your small business records and reports up-to-date. They will track expenses, income, profits, taxes, etc. This involves data entry and financial management that they use to generate financial statements. A reliable bookkeeper should have their CPB or CB certification.


Most accountants work in an advisory role for small business owners, with a few bookkeeping tasks. They primarily manage business accounts, assess financials, and offer strategic advice using bookkeeping records. A standard accountant doesn’t require qualifications in many states. They are classified as “unenrolled preparers” by the IRS, which means they can not represent your business for tax audits or sign tax returns.

Certified Public Accountant (CPA)

A CPA is an accountant with the qualifications to handle all business finances. They must have a CPA qualification and continue to pass their exams to practice. Many states also have additional licensing requirements. Every CPA is an accountant, and they perform many of the same tasks. However, a CPA can represent your small business at tax time, and in case of an audit. This gives your business an extra layer of security. They also provide business advisory services, bookkeeping services, record keeping, tax advice, and accounting services.

When to Hire an Accountant

While your business may not be making enough to hire a full-time accountant, you can outsource accounting services as you need. Some of the most common times to outsource include:

When You Start Your Business

Starting your business off on the right foot is important, especially when it comes to finances. To ensure your setup runs smoothly, meet with a CPA first. They can help you register and launch your business, setting up the correct tax filing for your business. For example, a CPA can help you decide if your small business should be an LLC or S-Corp. Additionally, the CPA will review your business plan, ensuring that it is financially sound, and offer budgeting and business advice to execute your plan. If you are handling your own bookkeeping, your CPA can also advise on software and give tips.

To Handle Recurring Financial Tasks

Time is money, and having an accountant can save you time. Daily tasks like tracking expenses, matching transactions, data entry, or digitizing receipts are time-consuming. Thus, you could save money by outsourcing to a bookkeeper for these tasks. However, if you also need regular financial services to review trends, costs, revenue, and spending, a CPA would be better.

When You Apply for a Loan or Funding

Applying for a small business loan or funding can be a challenge even for established businesses. A CPA can help you with your applications to better your chances of success. They can also help you evaluate your expenses, profits, and current credit risks to find the best funding options. For example, they may find a line of credit or microloan that better suits your needs and budget over a standard term loan.

During Tax Time

The tax season is often stressful and done incorrectly, can be costly to your business. Therefore, it is in your best interest to hire a CPA, or accountant to review your financial documents before filing. Federal tax laws are ever-changing, and a CPA is required to know the various tax codes and filing rules. A CPA can also manage both business and personal tax filing, saving you time and money. They also reduce your liabilities and can represent your business if there are any issues.

Knowing when to hire an accountant for your small business isn’t black and white. However, all small businesses should consult with a CPA for business setup and tax time. Using a CPA in these situations saves you money and ensures that you are legally complying with tax requirements. Having peace of mind in financial situations is worth the money.

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