If you’re thinking of opening your own small business, you may think it will be easy for you to keep up with your own finances, taxes and payroll. You’ll only think that about a week. At that point, you’ll either get lazy and not keep up the way you should, or you’ll have to consider hiring an accountant. As expensive as you may think that is, understand that a small business needs an accountant, too. It’s surprising how much detail goes into keeping the financial side of your new venture in good shape.
One of the first things you’ll be surprised to learn is that you have to pay payroll taxes with every pay period. If you pay someone $10 an hour, you’ll not only have to back their taxes and deductions out of that paycheck, but you’ll also have to pay your portion of their taxes. So you’re actually paying that person more than $10. Unless you’re just a numbers wiz, this can get really confusing really quickly. Sales tax is another element of your businesses financial side that you cannot let get away from you. Now add in paying your suppliers, your utilities and rent, keeping up with your income and expenses. Five years later, the IRS walks in and wants to audit you! Did you keep your accounting in good enough shape to get through that audit?
No matter how much of the financial part of your small business you choose to turn over to him, you still need to hire that accountant. It may be that you gather up your best attempt at keeping your books once a month, and hand it over to the accountant to straighten out. It may be that the accountant takes care of everything related to money. And it may be that you’re so darn good with numbers that the accountant simply does your tax returns. However you do it, it’s good to have that neutral set of eyes on your finances. In the long run, it will totally be worth it as your business begins to grow.