At the beginning of your journey into entrepreneurship, it’s relatively easy to keep a handle on your business finances. But as your company grows, you suddenly have much more on your plate, from suppliers and customers to employees and logistics.

The good news is that you’re reaching new heights with your business. The bad news is that accounting becomes hectic, and that’s where an accounting firm comes in.

This guide explores the top 3 reasons to hire an accounting firm today and how it can help your business avoid common accounting mistakes. First, let’s find out what an accounting firm does. 

What Does an Accounting Firm Do?

Accounting firms come in all shapes and sizes, but they offer essential financial services for entrepreneurs. As you’ll see below, an accounting firm does more than crunch numbers.

1. Auditing

Financial audits are legal requirements that investigate a company’s status. Businesses typically have one annual audit, but quarterly audits can help you stay on top of your finances and compliance regulations.

2. Tax Preparation

Taxes are tricky for businesses of every kind because of the complexity of tax laws and the sheer amount of paperwork involved. An accounting firm can help you navigate your taxes and save you money in the long run.

3. Bookkeeping

Most business owners have a basic idea about balancing their books, but only a certified accountant can break down your cash flow. You need to match your revenue streams and expenses with your bank statements to see exactly where your money is going. Hire an accounting firm to track every dollar in and out of your business.

4. Financial Advice

An accounting firm offers sound financial advice to drive your business forward. For example, you can learn about business trends, potential risks of doing business, and updates in tax or financial regulations. Accounting firms have ready access to this information that can boost your business operations.

5. Valuation

Suppose your business is looking for loans or private investment. In that case, an accurate valuation is crucial to getting the best possible deals. An accounting firm can give an expert valuation by studying your revenue streams, expenses, growth trends, human resources, and projections or forecasts for your business. You can then use this data to pitch to investors or apply for business loans.

The Top 3 Reasons to Hire an Accounting Firm for Your Business

Outsourcing any service has a high initial cost, but it’s well worth the investment. Treat an accounting firm partnership as a strategic business move that improves your business over the long term. Here are the top 3 reasons to hire an accounting firm for your business today.

1. Time Savings

Account reconciliation and tax filings need care and attention, but so do your employees, customers, suppliers, and competitors. Use the time you put into DIY accounting on other business operations.

For example, you may spend hours surfing government websites to understand tax laws, procedures, and deadlines. But a professional accounting firm is already well-acquainted with these topics and knows precisely what your business requires.

The right accounting firm can take care of the books, taxes, and paperwork and allow you to dedicate your energy to building your company.

In addition, an outsourced accounting firm catches errors before they hit your bottom line or end up in fines. DIY accounting often leads to tax complications that an expert accountant can easily avoid.

Shortcuts are tempting to save time, but instead of risking your business, pay an accounting firm for their time and expertise. Your accounting partner also resolves tax challenges in your favor, so you don’t have to take any more time away from your business.

2. Cost Savings

An accounting firm saves you money in two ways. First, an accounting expert helps you take full advantage of tax breaks. This goes beyond your usual tax deductions for business expenses. The Australian government often gives tax breaks as incentives like asset write-offs, wage subsidies, research and development (R&D), or refundable tax offsets for losses. Hire an accounting firm to leverage these opportunities for your company. 

Secondly, an accounting expert helps you avoid hefty fines that come from tax errors. Tax penalties cost businesses an astonishing amount of money every year, from avoidable mistakes like late submissions to significant oversights in record keeping.

A professional accounting firm guarantees that you never pay these fines for as long as you’re in business. They’ll keep you updated on date changes, submission requirements, tax law amendments, and more.

3. Meeting Compliance Requirements

Compliance is all about regulating industries to provide quality products for consumers. Unfortunately, compliance requirements change rapidly because of new technology, competition, cybersecurity, anti-money laundering, digital privacy, and many other factors.

The Covid-19 pandemic triggered numerous compliance changes for businesses around the world. All these factors can affect how you do business, including your accounting software, banking apps, credit and debit cards, payroll, etc.

For accounting specifically, compliance means keeping records for at least five years after every transaction, plus knowing your fines and interest charges for errors. An outsourced accounting firm becomes your eyes and ears to keep you updated with regulations that affect your business. This way, you can implement any necessary changes in your company without missing a step.

Prevent These 5 Common Accounting Mistakes with A Professional Accounting Firm

The top 3 reasons to hire an accounting firm for your business are only the first step to streamlining your company. You may think a premium accounting software package is better than paying for professional accounting services. Here are the most common accounting pitfalls entrepreneurs face without a professional accounting firm.

1. Mistaking Cash Flow for Profit

Nothing is more exciting for an entrepreneur than bagging that first client. But how do you record that in your accounting books? Not every deal you close is income because you still have to deliver your product and wait for customer feedback.

For example, if you get a web design deal, it will take time to build, design, test, and launch the site for your client. What seems like a profit may end up in costs. This mistake is the quickest way to distort your financial records and cause headaches in the long run.

2. Mistaking Contactors for Employees

There’s a difference between how you account for employees and contractors. It affects payroll, insurance, and assets required for their jobs. Business owners often make this error out of ignorance or laziness–they’re all workers, right? But this mistake always leads to tax problems.

3. Overlooking Petty Cash

Small transactions can make or break your accounting system. Successful businesses track and record all spending, large or small. But given how hectic it is to keep a business going, activities like paying for postage or highway tolls seem insignificant. But all petty cash transactions should appear in your financial statements to make accounting sense.

4. Relying on Cash Over Accruals

Cash-basis accounting is the most straightforward method to track your business finances–cash in, cash out. But this rarely covers all business transactions and expenses. You often enter into agreements with your clients to supply your product, and payment comes later. You also agree with your suppliers to deliver goods for your business and then pay them later. Accrual accounting tracks these activities, but it’s more complex than a cash basis.

5. Keeping Disorganized Records

Business owners may hang onto every receipt and invoice, only to throw them into shoe boxes for lack of time. Hardcopy documents are easy to misplace or lose in case of a disaster. Human error also interferes with manual data entry.

Even scanning and uploading your transaction documents requires extra care in case of a data breach. A professional accountant creates an accurate, easily updated, and secure system to save your digital and physical records.

Get Financial Peace of Mind with AdviceCo

As you can see, DIY accounting is more costly than expected. Small mistakes mean hefty fines, losses, and anxiety-ridden government audits.

AdviceCo wants you to enjoy financial success, beginning with the top 3 reasons to hire an accounting firm for your business. Our team of accounting experts handles all your bookkeeping needs to keep your company in the black. AdviceCo offers comprehensive accounting services, including:

• Tax returns (for individuals, partnerships, payroll, income, PAYG)
• Debt management during financial hardships (debt write-off, payment plans, debt restructuring, insolvency)
• Virtual Chief Financial Officer (CFO) services (financial reports, cash flow forecasts, growth planning, exit strategy planning, expert advice)
• Xero software support (setup, training, invoicing, compliance, automation, integrations)
• Family services (estate and succession planning, tax structures, investments, philanthropy)
• Covid-19 government support for businesses (subsidy applications, JobKeeper/JobSeeker opportunities, cash flow options, strategic resource planning)

Choose AdviceCo as your trusted financial partner as you navigate entrepreneurship in an ever-changing world. Start with a free consultation or call 02 4320 0500 today.