Do you use an accountant to prepare your taxes or provide financial advice? If you’re trying to DIY to save some money instead of hiring an accountant, you could be costing yourself more than you save. In the TSheets 2019 Tax Season Debrief, a whopping 88% of small business owners with employees say hiring an accountant was money well spent. Some 89% of self-employed business owners (those with no employees) say the same thing.
Benefits of hiring an accountant at tax time
Some 58% of small business owners and 47% of self-employed business owners hired an accountant to help with their most recent tax return. More than half paid less than $300 for the accountant’s services, and 44% said it took two hours or less to get their paperwork in order to hand off to an accountant.
Those who did not use an accountant, on the other hand, spent an average of 8.8 hours preparing and filing their taxes. How does that compute? Well, if you bill $100 an hour for your business’s services, you could either spend almost $900 of your own time preparing and filing your taxes—or you could pay $300 to have a professional do it.
There are lots of other ways hiring an accountant can save you money at tax time.
- Accountants keep up-to-date on the latest tax information so they know which tax deductions you’re entitled to and how to minimize your tax liability. (This is especially important in the wake of recent tax law changes.)
- Accountants know how to keep you out of trouble when you file your taxes and can also serve to represent you before the IRS if you should get audited.
- As they prepare your taxes, accountants will likely notice ways you could do things differently in the coming year to help keep more of your money the next time you file your taxes.
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How an accountant can help you all year long
Accountants can be valuable for more than just tax preparation, however. In fact, they can be vital partners in all phases of your business.
- Pre-launch stage: As you develop your business plan, you can use an accountant to help create the financial section of your plan and make sure all your numbers add up. This is especially important if you’re trying to get a bank loan or obtain capital from an outside investor. Accountants can also advise you on whether to buy or lease equipment, how to price your products and services, and other key decisions that can help you maximize your startup capital.
- Startup stage: If your business is just getting off the ground, an accountant can help you set up your accounting system, decide whether cash basis or accrual basis accounting is best for your business, and choose the right type of accounting software for your needs. Particularly if you are in a specialized industry, an accountant can be invaluable in helping you choose industry-specific accounting software or even customizing software to your requirements.
- Growth stage: As your company grows, an accountant can help you implement payroll systems when you hire employees, assess the financial impact of different types of employee benefits, generate financial reports and review them with you, and advise you on ways to improve your cash flow.
- Exit stage: You probably don’t want to think about the day when you will leave your business, but accountants can help you prepare for that, too. Hiring an accountant who can advise you on retirement plans and personal investments will help you grow a nest egg. They can also help you maximize the value of your business if selling it is part of your retirement plan.
With so many sophisticated accounting apps available today, and more on the horizon as the use of artificial intelligence grows, it may seem as if you don’t need a flesh-and-blood accountant. However, another study by TSheets found that significantly more people value accountants over accounting software.