Small Business Accounting Advice: Don't Hire a Full-Time Accountant
by Michael Burdick, on Apr 4, 2016
We at Paro want to let you in on a little secret: your business doesn't need a full-time accountant. Starting a business is tough especially when budgets are tight. But instead of hiring someone to manage your books for $60k a year, we suggest bringing on a highly experienced financial professional to do your accounting for just a few hours a month. Here are a few reasons why:
Your time is money
The CEO of a startup is the perennial Jack of all trades and (hopefully) a master of a few of them. Chances are he or she is not a master of accounting. Taking care of the books takes time that could be spent chasing down leads or wooing investors. Think of it this way: imagine a CEO values his or her time at $200 an hour (which is conservative, in our opinion). It’s not a stretch to think that just prepping for taxes (a fraction of what an accountant can do) will take at least a full day’s work. Considering you can outsource an accountant for a fraction of what the CEO values his / her time, he / she can actually create several thousand dollars of value by outsourcing the accounting function.
Taxes are hard
Even with well-designed software like Turbotax, filing your personal taxes can be a nightmare. Doing them for your startup can be even worse. An experienced accountant knows our Swiss cheese-looking tax code in and out and can identify the right holes to save you time and money. Accountants often serve as your financial consultants and advise you on the best way to handle your money. Investing in tax advisory services now, even though they aren’t cheap, will actually save you money down the road.
Decisions will be easier
One of the most important things your accountant can do for you is help manage your budget. As we described here, a well-maintained budget enables you to identify spending patterns and better plan the cash flow of your business, reducing risk in the process. And while you should be skeptical of the dubious claim that 8 out of 10 small businesses fail, it’s undeniable that well-maintained books will put you in a better position to succeed.
Finally, decisions won’t just be easier for you, they’ll be easier for your stakeholders as well. Investors and bank lenders want to hear that your business is both desirable and viable. While your go-to PowerPoint deck might help persuade them on the former, accountants can be instrumental in providing the latter. With financial projections at the ready, you can be prepared to walk into a pitch with both the story and the numbers to back it up.