How and when to hire an accountant for your small business

Small business owners often hire an accountant when they encounter an event that requires deep accounting expertise, such as a funding round or audit. Some hire an accountant during tax filing season or to free up time to focus on other priorities.

As you grow, you'll inevitably start thinking about when you need to hire an accountant. After all, you have plenty of other jobs to do, not least of all planning your business’s growth.

To help answer that question, we've outlined when to hire an accountant for your small business, what services they provide, key benefits, cost considerations, and how to choose the right one.

Does a small business need an accountant?

Hiring a small business accountant is a significant step in building out your company's financial operations. While not every business needs full-time accounting support from day one, many owners face challenges such as time constraints, limited accounting expertise, and the risk of costly errors when trying to manage finances on their own.

If your business is still small and your finances are relatively simple, DIY accounting or in-house bookkeeping can work, especially if someone on staff already has those skills along with a solid grasp of financial reporting.

But as your business expands, your taxes grow more complex, or you need to meet strict compliance requirements, handling it yourself becomes riskier. At that point, an accountant can help reduce your administrative burden and provide the strategic insights you need.

What to consider before you hire an accountant

Here are a few key factors to consider before bringing an accountant onto your team:

• Level of financial support: Are your financial needs still relatively simple, or are they becoming more complex? Bookkeepers handle day-to-day transaction tracking, while accountants interpret that data for tax filing, compliance, and long-term planning.
• Budget: If you don’t have the income to bring on a full-time accountant, you might start with a part-time hire or an accounting firm. These options can be cost-effective in the early stages of your business.
• Business size and growth: A larger business or fast-scaling organization may benefit from dedicated accounting support to improve financial reporting and guide strategic decisions
• Tax situation: Are your business taxes straightforward, or do you deal with frequent deductions, quarterly filings, or multi-state operations? If it’s the latter, an accountant can help ensure compliance and identify tax-saving opportunities.
• Compliance needs: If you’re subject to industry-specific regulations or anticipate an audit, professional accounting guidance can reduce risk and help you stay prepared

What does a small business accountant do?

A small business accountant handles more than just tax filing; they manage the financial side of your business so you can focus on growth. Typical services include:

• Bookkeeping and recordkeeping: Organizing and tracking income, expenses, and receipts
• Tax preparation and filing: Ensuring returns are accurate, timely, and optimized for deductions
• Payroll management: Processing employee paychecks, withholdings, and payroll taxes
• Financial reporting and analysis: Creating balance sheets, income statements, and cash flow reports to inform decision-making
• Business structure advice: Helping you choose or change your legal structure to align with tax and growth goals
• Ongoing compliance and regulatory support: Keeping you up to date with changing tax laws and industry-specific requirements

Benefits of hiring an accountant

Bringing an accountant onto your team can deliver more than just accurate books. The right professional can save you time and reduce stress while giving you the financial insights you need to grow. Here are a few key benefits:

Saves you time and reduces stress

Accountants take on time-consuming tasks such as bookkeeping, tax preparation, and financial reporting. Instead of spending hours chasing receipts during tax season, you can hand off the details and trust that everything is filed correctly and on time.

Ensures compliance and accuracy

Accountants help you avoid costly mistakes and penalties, whether it’s staying on top of changing tax laws or preparing your business for an audit. Their expertise ensures accurate financial statements and organized records. They also make sure you meet all regulatory requirements year-round.

Provides strategic financial insight

Beyond day-to-day accounting, a good accountant can guide bigger-picture decisions. They can help you identify tax deductions, optimize cash flow, and prepare budgets or forecasts. If you’re seeking funding or applying for a loan, they can also supply the detailed financial documentation and analysis lenders look for.

When to hire an accountant for your small business

Certain business milestones or financial situations can signal it’s time to bring in a professional for your small business accounting needs. Here are a few instances where it makes sense to hire an accountant:

You’re starting a business or registering a new entity

An accountant can help you choose the right business structure, set up your accounting system, and help you meet initial tax and compliance requirements. Getting this foundation right early on can prevent costly mistakes down the road.

You’re entering a funding round or seeking a loan or investors

Whether you’re raising money through a traditional funding round, pitching to investors, or applying for a business loan, an accountant can ensure the influx of capital flows into your financial statements correctly and establish appropriate reporting practices. The right accountant can also make projections and run reports to secure future funding rounds.

You need help during tax season or face complex tax situations

Even if you’re comfortable filing your own business taxes, hiring an accountant can save you valuable time and reduce the risk of costly errors. A knowledgeable small business accountant may uncover additional small business tax deductions and recommend strategies that lower your overall liability. They can also guide broader financial decisions that improve your long-term tax position.

You’re experiencing rapid growth or increased transaction volume

A fast-scaling business needs stronger financial oversight. An accountant can improve transaction tracking, streamline reporting, and provide insights that help you manage cash flow and plan for sustainable growth.

Your FP&A requires better inputs

Financial planning and analysis (FP&A) relies heavily on accurate financial data and reporting. Accountants provide the foundational inputs FP&A needs to analyze performance and guide strategic decisions. A good relationship between accounting and FP&A can lead to more innovative and effective financial management, especially when assessing cash flow.

Your business faces an audit or compliance review

While no business wants to hear that the IRS is reviewing their financial records, having a skilled, certified accountant on staff can make it a much smoother process. An experienced accountant will ensure your balance sheet and other financial documentation are in order and help guide you through the audit with ease.

What to look for when hiring an accountant

Here are some qualities to consider when hiring an accountant for your small business, whether it’s in-house or through a third-party firm:

• Billing structure: Will you pay for their services hourly, on a retainer rate, or on a project-based fee? It’s important to understand how much an accountant charges and how they assess their fees.
• Services provided: Some accountants specialize in services such as tax preparation or payroll management. Make sure the person you work with offers the accounting services your business needs and has the flexibility to support your growth.
• Experience: Look for an accountant with experience working with businesses like yours, particularly in terms of industry and business size. Their understanding of your unique challenges will help make managing your business finances easier.
• Certifications: While hiring an accountant with a certified public accountant (CPA) license typically costs more, the designation signifies they have more training and experience. Other valuable certifications to look for include chartered accountant (CA), certified management accountant (CMA), or enrolled agent (EA).
• Communication style: Choose an accountant whose communication style aligns with yours, whether that’s weekly phone calls, meetings, or daily email exchanges. If they work for a firm, ask whether you’ll communicate directly or through an assistant.

How to find and hire an accountant for your small business

Here’s step-by-step guidance for finding and hiring a small business accountant:

1. Identify your unique accounting needs

Start by determining what level of support you need. Are you looking for help with tax filing only, or do you want a full-service accountant who can also handle payroll, financial reporting, and long-term planning? Make a list of your current pain points and your short- and long-term business goals to help narrow down candidates.

2. Set your budget and expectations

Accountants may charge hourly, on retainer, or per project. Typical rates can vary widely depending on location, experience, and scope of work. Decide how much you can afford, keeping in mind that greater expertise often means better accuracy and strategic insight. Set expectations for deliverables and response time before beginning your search.

3. Evaluate firms or individual accountants

Research potential candidates by reviewing their credentials, online reviews, and industry experience. Look for professionals who have worked with businesses similar to yours in size and sector, and check for relevant certifications, such as CPA or EA, which can indicate additional training and expertise.

4. Schedule interviews and check references

Prepare a list of questions for each candidate, covering their experience, approach to problem-solving, and preferred communication style. Ask for references from current or past clients, and follow up to confirm their reliability and quality of work.

5. Meet to discuss ongoing support

Before you make a final decision, have a meeting to align on expectations for ongoing support. Discuss how frequently you’ll communicate, what reports you’ll receive, and how they can help your business grow.

How much does an accountant cost?

The median pay for accountants is roughly $39 per hour or $81,680 per year, according to 2024 data from the U.S. Bureau of Labor Statistics.

Salary can vary by industry and region, with those in finance and insurance earning a median wage of just under $88,000. Per Indeed, accountants in New York and Irvine, California, report the highest average salaries, in line with areas with higher costs of living.

If you want to hire a full-time accountant, you’ll need to factor in salary, benefits, and other compensation. Outsourcing accounting duties to an accounting firm or hiring a part-time accountant can be more cost-effective in some instances.

Automate your accounting process with Ramp

Hiring an accountant is just one step toward improving your business’s financial operations, but you can take it a step further with automation. Ramp’s AI-powered accounting automation software simplifies your accounting workflow, improves accuracy, and reduces time spent on manual tasks.

Our business accounting software automatically categorizes and codes expenses based on historical transaction data, eliminating repetitive functions and reducing the risk of errors. It also speeds up your month-end close by automating transaction reviews and flagging issues, such as missing receipts or miscategorized expenses, to ensure your data stays accurate and compliant.

As your business grows, we scale with you. Ramp offers real-time data syncing and integrations with platforms such as QuickBooks and Xero, giving you an efficient, reliable foundation to manage your finances.

Ready to get started? Try an interactive demo and see how Ramp can automate accounting tasks for your small business.