Why You Should Hire an Accountant for Your Startup
The day after sketching their big idea on a napkin for a potential investor, including vital staff positions, many founders realize they also need to hire an accountant. Actually, they needed one yesterday. That’s because an accountant can provide valuable insight before the company launches, ensuring they’re on the right trajectory.
If you wait until you’re an established company to bring an accountant on board, it may be too late. For one, an accountant can help you determine how much capital you’ll need to hit your next milestone, which will help you negotiate with investors.
If you have a plan for the next big thing, turn your dream into a reality with the help of a skilled accountant. We’ll discuss some of the key advantages of hiring an accountant for your startup early in the process.
Hire an Accountant to Avoid Early Pitfalls
Instead of worrying too much about the cost of bringing an accountant into your startup early, consider it an investment that will probably save you time, stress, and money as you scale up. One survey found that only 30 percent of small business owners work with accountants, although roughly the same percentage of small businesses (28 percent) have received notice of an audit by the Internal Revenue Service (IRS).
In addition to ensuring that you’ve correctly filed (and paid) your taxes, an accountant will make sure there are no surprises after you accept your first investment dollar, hire your first employee, sign your first office lease, or sell your first product. After all, entrepreneurs wear many hats and can’t focus their attention on finances and tax obligations 24/7. Little oversights can really add up, especially for lean startups.
Good accountants can help startups avoid problems both big and small by keeping track of cash flow, allocating funds for payroll taxes, and auditing for efficiencies to avoid unmanageable debt. According to a postmortem analysis identifying the top 20 reasons why 101 selected startups failed, running out of cash was number two (29 percent), followed by not having the right team in place (23 percent). Put those two together and it’s clear why you’d want to hire an accountant right away.
What a Business Accountant Can Offer You
Accountants do more than prepare tax returns and financial statements. They may also advise you on important finance software and other financial professionals who can help your business. Accountants are financial generalists who can help you get your startup off the ground, but you might hire additional finance professionals down the road. Here’s a short list of key financial people you should consider for your team:
- Bookkeeper: Oversees a company’s financial data and compliance, maintains accurate records on accounts payable and receivable, payroll, daily financial transactions, etc.
- Financial Consultant: Helps their clients accomplish financial objectives by assessing their current financials, developing strategies, and monitoring changes that may impact these objectives.
- Chief Financial Officer: Oversees and executes a company’s financial objectives, provides financial projections, tracks economic trends, oversees the finance department, etc.
Until your startup gets funding, you may not have the resources to pay for a full-blown financial team. Instead, you might rely on websites to help with forms or hire part-time financial help. So-called “drop-in CFOs,” for example, are professionals with C-suite experience who can handle multiple clients on a time-sharing basis. So long as they don’t have a conflict of interest, they can provide services such as:
- Making financial reports
- Managing financial projections
- Preparing documents for potential investors
Think about building your financial team this way: “ABC” for accountant, bookkeeper, and chief financial officer. There’s a reason why the “A” comes first.
How to Hire an Accountant for Your Startup
After you’ve decided to hire an accountant for your new venture, you’ll want to approach the process carefully. While the right hire is an important investment in your future, things can go south in a hurry if you rush things. Determine exactly what your organization needs, the type of individual you’re looking for (not everyone is cut out for startup life), what they’ll be expected to do, and what you’re willing to offer.
With this information in mind, you can write an effective accountant job description that will attract the right professionals for the job. Startups are often lean, providing salaries that are lower than what they could make at established firms. They also may be expected to work long hours. The flipside to this is the ability to have greater autonomy in their day-to-day activities and play a key role in building something great from the start, while they also may be enticed by the prospect of stock options.
Once you’ve had a chance to review the applications (after posting your job ad to one or more job boards with a wide reach), you’ll want to bring your top candidates in for interviews. Your interview questions should assess technical skills and experience, especially for an accountant, but you’ll also want to get a sense of their soft skills and whether they’re the right fit for your startup.
Remember, your prime reason for hiring an accountant at such an early stage in your company’s development is to get critical help charting the right growth trajectory and prevent problems that may otherwise go unnoticed. It’s an investment, so hire wisely.
Hire an Accountant Who Can Help Your Company Reach its Goals
Whether you’re in the scribbling-on-a-napkin planning stage or you’ve already started operations, having an accountant could save you time and money down the road. But beyond the importance of having a skilled accountant, you also need a staff you can rely on. Sign up today and get helpful recruiting advice for your business and information on the current hiring market and HR trends.