In our last two blogs, we discussed how you know it’s the right time to start using an accountant for your small business (click here to read that blog, but, spoiler alert, it’s never really too early). Then we gave some tips on how to find the right accountant for your business (you can read that blog here). If you think the only time that you will need your accountant is during tax time, you are missing out on all the benefits that working with a CPA can give you. A good accountant is a savvy financial advisor who can assist you with more than just filing tax returns. In fact, business owners in particular should be speaking with their tax professional much more than the average person.
One of the conversations you should be having with your accountant is an overview of your company’s business performance so far. Included in this dialogue should be discussion of any major expenditures that may be coming up, such as expenses for new equipment or planned increase in the size of your workforce. Your accountant can offer strategic methods of improving cash flow and help you create an effective cash flow model.
It’s important to keep in mind that your accountant should not be the only one who knows how your books work. Ask your accountant to help you gain an understanding of your cash flow and what areas can be improved upon. An accountant can provide helpful insight by recognizing cash-flow tendencies that may have otherwise been overlooked. According to Avalara, nearly 75% of small businesses do not have a plan that will protect their business in case of operational disruptions. An accountant can help you mitigate risks by ensuring that insurance policies, fraud protections, and internal controls are up to date.
If your business is involved in the sale or resale of goods, it’s important to make sure that you’re working with your accountant to stay on top of sales tax rules and regulations. As many states have nexus rules that relate to a where a business’ warehouse is located or where orders are fulfilled, it’s always a good idea to assess your order fulfillment process. This should also be done to ensure that unsold inventory is being properly accounted for in your books, all restock and order processes are maximizing your business’ cash flow, and that sales tax is collected everywhere the business has nexus. In order to guarantee tax compliance, you should review any newly implemented tax laws that could have an impact on your business with your accountant in order to develop a plan to effectively address them.
Finally, it’s important that your accountant is aware of your company’s financial needs and wants. If you are planning to make any major changes to your business, a discussion with your accountant can provide you with sound advice on the effect that those changes may have on your valuation and liabilities. An open line of communication between you and your accountant can help you recognize areas of opportunity and potential as well as help you avoid any pitfalls that might derail your business.