Small businesses are defined as a company with less than 500 employees. According to the U.S. Small Business Administration, small businesses make up 99.7% of U.S. employer firms. However, the SBA also proclaims that only half of these establishments survive 5 years and about one-third survive 10 years.
Why are so many small businesses failing?
Some of the greatest causes of small business failure are easily preventable with an experienced accountant: failure to anticipate cash flows, lack of delegation, and costly legal mistakes.
Here are three huge ways hiring an accountant can prevent failure in your small business:
- Cash Flow Management – As a small business, especially a startup, large payments to suppliers for the sake of inventory will be taken out. If items are being sold on credit, there can be an adequate amount of time between the sale and receiving the cash. This is a quick way to go into debt and a failure to anticipate cash flow could cause your business to sink. Hiring an accountant could easily block this issue with cash flow statements and forecast reports. An owner could easily create a financial report, but analyzing the data and studying the results is another story. An experienced accountant knows what to look out for in your cash flows and can advise you on what actions are in the best interest for your company.
- Delegation of Tasks – Small business owners are known to spread themselves too thin and have a lack of trust towards others in delegating tasks and decisions. Even if an owner is working 70 hours a week on his operations, the financial results can suffer and the market doesn’t care about how hard you tried. Authorizing an accountant to handle the financials and help make decisions gives a business owner the freedom to make their time more profitable. When you have a trusted accountant on your team who deeply understands where your business is financially, you can make more informed decisions when hiring staff, purchasing equipment, or even moving offices.
- Timely Compliance – The IRS loves to keep an eye on small businesses with their calendar full of filing deadlines and the tax laws that are always changing. Many businesses suffer from a lack of understanding in legal issues and not handling them promptly because as an owner, you don’t have time to conduct all of the research. With an accountant that is already an expert on keeping your business compliant, you can avoid penalties for missing deadlines and suffering costly consequences. An accountant will help you rest assured in knowing that your business is always up-to-date.
Small business owners keep a lot of weight on their shoulders to bring their business success on their own. These are just a few of the struggles small businesses face that hiring an accountant could take care of. There are no better experts in this field than SME CPAs to keep the future in mind for your operations and financials. Give us a call and let us show you how we can preserve your small business and achieve victories together.