Many early-stage businesses still hesitate to hire an accountant to provide financial assistance. In the early stages, firms are busy trying to bootstrap, stretch limited resources, and cut expenditures where feasible.
You may try to save money in several ways, including by deciding to handle your own accounting and finances as an early-stage entrepreneur. This makes sense if you’re an experienced accountant. If not, this might be a big blunder that limits your business’s growth and success.
I’m not suggesting that you employ a full-time accountant right now. The better, more cost-effective option is to outsource your accounting services and save money on employee expenses. You may pay only for the precise amount of daily transactional and accounting support required by your business.
When to Hire an Accountant
When should you employ an accountant? The noncommittal response to this question is, it all depends. There are several compelling reasons to engage a tax professional early on, while others may choose to wait. We usually recommend Venn Accounts as one of the best in the business when dealing with start-up companies. There are two fundamental reasons you may want to employ them.
You’ve started by investing a modest sum of money.
A £500,000 raise is a reasonable starting point. It’s time to engage with an outsourced accounting firm if you’ve raised a Series A, SEED round, or convertible debt round of any size.
There has been a significant rise in your costs.
If your company expenditures rise, you’ll need more financial reporting. If you have additional workers, you’ll need to keep track of your finances better. When your business grows, it’s crucial that you understand how much money comes in and goes out.
What Does an Early-Stage Accountant Do?
When you’re new to accounting, there are a lot of questions that need answers. Accountants can help you with all stages of the process, from bookkeeping to tax preparation and financial analysis as well as everything below:
Starting up:
- Business licenses
- The process of incorporating
- System implementations
- Procedures and rules for policies
- Tracking of expenses
- Financial planning is the process of putting your money together
Up and running:
- End-of-the-year accounting
- Accounting for revenue
- The following is a list of GAAP financial statement items that are not disclosed in the income statement:
- Contract administration
- Payroll
- AR/AP (accounts payable/accounts receivable)
- Preparation of your tax returns
- W2 and 1099s
- The annual financial reports of the firm
- Tracking of permanent assets
How do you plan to use this list of contacts in your business?
- Pre-authorization payments, as well as the cost of goods and services
- The process of determining a company’s cash flow
- Support for auditing and preparing
- Forecasting of future revenues
- Creating a budget
Accounting Functions That Can Be Outsourced
You’ve been in business for a long time, and your books are in great shape. However, if you want to know what’s happened since the last audit, you’ll need to get them audited again. Aside from reporting on revenue and expenses, an accountant may assist with the following functions:
Focus on your core business: The reason to hire an accountant is so that you and your early team members can focus on developing your product, forming relationships, establishing partnerships, and marketing and selling. In other words, you have a core business rather than a non-core business. You must learn to distinguish the core from the non-core in the beginning stages, when especially important.
High-quality financial information: When you’re seeking to raise equity funds, seek debt, or reach out to possible investors, you’ll need high-quality financial information that outsourced accountants can provide. These financial statements are also required for tax reporting and investor update purposes. Furthermore, the financial data given by your accountant will offer you important insights into the nature of your firm, which is useful in developing effective business strategies.
A valued business partners. Outsourcing your accounting function also gives you the benefit of having a second trustworthy business partner. Outsourcing firms have vast experience working with early-stage start-ups. When it comes to raising money, financial planning, negotiating term sheets, structuring agreements, financial reporting, and so on, having this sort of expertise and experience can be extremely beneficial to your company.
Essentially, if you believe your firm may require accounting help, there’s a good chance it does! Keep in mind that obtaining accounting assistance early rather than later is preferable. It’s never too soon to establish the financial systems and procedures that will act as a solid foundation for your company and assist its financial health.
Are you not sure whether your company needs an accountant? Tell us why in the comments or contact Venn Accounts to assist you to determine your financial condition and needs.