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A solid financial reporting function is critical for any small business . But managing daily operations can be a struggle for emerging companies—and important accounting tasks often get neglected.

According to a report, only 30% of small businesses have an accountant, even though 60% of business owners admit to lacking knowledge in accounting. One of the reasons for this reluctance to hire an accountant is the cost associated with hiring and onboarding a full-time employee.

Outsourced accounting firms offer a popular alternative to hiring an onsite employee. These companies provide a combination of innovative technology and human expertise, delivering a more accurate and complete accounting solution at a fraction of the cost of hiring a full-time staff member.

What does a small business accountant do?

We often run to an accountant around tax filing time. However, while tax preparation is one of the first services that businesses tend to outsource, accounting firms offer much more to your small business.

An outsourced accountant can take a holistic approach to analyze your finance operations to optimize and simplify your company's books. Some of the services provided include:

  • Monthly close reporting (including quarterly or annual reports) - which provides you with regular review of finance operations
  • Documenting,  updating accounts receivable and accounts payable - which provides you with good management of cash flows and helps identify collections or payment issues
  • Tax returns preparation - tax filing needs to be accurate to avoid potential states and IRS audits
  • Other tax compliance such as sales tax filing, franchise and local taxes filing
  • Cost accounting and Inventory management and control- which provides an accurate analysis of costs incurred to provide services and build products
  • Establishing key performance indicator (KPI) metrics - to measure the performance of the business
  • Payroll operations - this can be needed if employees are located in multiple states and registration and filing need to be done
  • Implementing and maintaining financial reporting, accounting and tax softwares 

Many small business accountants also offer training on how to tailor your technology to your specific needs. Some small companies still use outdated software and reporting methods, but hiring an accountant gives you access to cutting-edge technology that can save you a significant amount of time.

Why do I need a small business accountant?

Apart from saving you time, a small business CPA ensures the accuracy of your finances. Having complete and correct financial data at your fingertips provides a better understanding of your company's financial situation, leading to better decision-making for your business's future. A good set of financial records can also give you better access to lenders, investors and commercial partners.

Accountants for small businesses can also play a critical role in rapidly growing companies. Unlike an onsite accountant, advanced accounting firms can scale with you as your company grows. The services they use to do their jobs more efficiently can also prevent overspending by identifying and stopping any non-compliant charges.

An accounting firm brings a better-qualified team of professionals who are well-versed in industry standards and up-to-date on current tax legislation. Additionally, hiring an accounting firm means you usually have more than one professional assigned to your account, increasing the availability of help when you need to close out the books.

How to find the right small business accountant

Most business owners understand the value an accountant provides, but how do you find a good accountant? You can start by asking for referral, ask your friends, business partners, bankers, everyone that might be able to help. While you may not personally know a small business CPA, reach out to your friends and co-workers. They may be able to refer you to an accountant they trust.

Whether you get a referral or not, it's a good idea to independently evaluate their qualifications and expertise. Look for a firm or an individual with an established history of success and experience working with businesses similar to yours. Each industry has specific challenges, so when you interview prospective accountants, it's important to understand their experience and how they can be valuable can integrate with your operations. For example, if you are a real estate business, it is best to engage a firm that has accounting expertise in real estate.

As accounting firms are increasingly in demand, online accounting solutions have emerged worldwide. While most are legitimate, it's crucial to ensure that the accounting firm can keep your company's accounts and data secure as your finances are the lifeblood of your small business.

Another factor to consider is communication. How can you reach the accounting firm, and will they be available when you need them? This is especially important if your business operates outside traditional working hours.

How much does a small business accountant cost?

Many small business owners worry about the affordability of hiring an accountant. Hiring a dedicated professional can be expensive, with the most recent data from the Bureau of Labor Statistics indicating that accountants make an average of $37 per hour. Credentialed accountants with CPA or CMA designation can charge between $100-$500 and some well-renown firms can charge even more.

While small business accountants may earn less, it's crucial to consider salary plus the cost of training and benefits that full-time employees require. There is also the risk of losing accounting coverage if an employee goes on vacation or quits unexpectedly. Additionally, your business might not need the services of a full-time accountant employee.

Accounting firms can provide more stable coverage and generally cost less than hiring a staff accountant. That's because accounting companies offer customizable pricing. If you only need specific accounting functions, a small business accountant can provide those functions at a personalized cost or for a monthly retainer. Some small businesses only need accounting help for specific projects. For example, if you've been using QuickBooks and your company has grown, you may be considering a transition to NetSuite. In such cases, you can hire an accounting firm to help you complete the transition at a one-time cost.

Establishing a Successful Partnership

Now that you've identified your needs, how do you hire an accountant? The first step is to create transparency by analyzing your operations. What are your short-terms and long-term needs?  This will allow you to provide your accountant with accurate and up-to-date information about your company's financial situation.

This includes evaluating any current software you're using and understanding the accounting duties performed by your current staff. This will help you communicate your needs to your accountant and define their role in your company's performance.

How to hire an accountant

After evaluating your situation, how do you find an accountant for your small business? Choose an accountant with whom you can build a long-term relationship, understanding that their role will adapt as your company evolves. This will ensure clear and updated reporting and help you make financial decisions that sustain your business's growth.

Leveraging small business accounting software

Technology plays a critical role in any accounting operation, and there are powerful software tools available that can simplify and streamline your accounting tasks. Ramp's accounting automation software is at the forefront of the industry, providing accurate records and eliminating time-consuming repetitive tasks during month-end close.

While technology is more efficient than ever, it will never replace the unique insights that a small business accountant can provide. A dedicated financial professional can save your business a substantial amount of time and money in the long run.

If you're considering hiring an accountant for your small business, reach out to our trusted accounting partners today.

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Senior Controller, Ramp
Born and raised in Haiti, Edwine has lived in Canada, France, Grand Cayman, and currently resides in Boston with her family. She is a CPA and has had many leadership roles at EY, PwC, and Circle. She joined Ramp in March 2021 as our first controller.
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