Saving Advice - Keeping your financial house in order is essential. For many people, managing the task themselves may seem like the logical choice. However, that doesn’t mean getting assistance from a professional isn’t the wiser move. If you’re wondering, “Do I need an accountant?” here are eight signs that the answer is probably “yes.”
1. Your Finances Take a Lot of Time
If updating your records, planning for upcoming deadlines, or handling similar financial tasks is taking up far more of your time than you’d like, then hiring an accountant isn’t a bad idea. It’s a chance to hand those activities off to a professional, all while giving yourself more time to focus on other areas of your life.
Precisely how much time is too much is a personal decision. Ultimately, if dealing with your finances feels like less of an annoyance and more of an outright burden, you may have crossed the threshold.
2. You Make Mistakes Regularly
Whether your financial situation is highly complex or relatively straightforward, if you find yourself making costly mistakes regularly, it’s time for an accountant. Even small missteps in managing your records, paying taxes, or creating critical business reports can come with big penalties. As a result, if errors are more common than you’d like, working with an accountant is your best choice. They’ll help ensure accurate records, tax filings, and more, allowing you to avoid the consequences that usually come with mistakes.
3. You’re Taxes Are Complex
The complexity of a household’s or company’s taxes can vary based on a number of factors. While some are reasonably simple to manage, if yours are getting complicated, working with an accountant is an intelligent move.
With an accountant, you can make sure you understand your liability. Plus, they may be able to help you identify additional deductions you’re eligible for or help you make specific moves to reduce what you owe. They can also help ensure that you’re taxes are completed accurately, allowing you to avoid penalties, fees, and other repercussions for incorrect information.
4. You Started a Business
Launching a company is exciting, but it’s also financially complex. You’ll have to keep very specific records, may qualify for new deductions, and may need to handle your taxes differently. Plus, there are usually some reporting requirements, depending on the business structure you’re using. You may also have to deal with paying employees, and that comes with its own challenges.
In many cases, hiring an accountant – either as a service provider or an employee – is wise when you’re starting a business. They can help you navigate this new situation, ensuring you have a solid foundation for properly managing and tracking company funds. Plus, they can assist with activities like tax filings and financial reporting, and may be able to assist with employee payroll.
5. You’re Business Took Off
Even if you’ve had your business for a while, if it suddenly takes off and begins drawing in far more revenue, your financial situation can get more complicated. It may be harder to predict how much cash you should keep in reserve or whether you’re over or underspending based on your new production levels. Additionally, figuring out if specific business investments are worth considering isn’t always easy.
By working with an accountant, they can give you clearer insights into your changing financial picture. Plus, they can make sure you’re prepared for future shifts, whether that’s a continued upward trajectory, a new plateau, or a correction that brings revenue down.
6. You Owe a Lot Every Time You File Your Taxes
Even if your taxes are correct, if you find yourself owing a sizeable sum every time you file, that means you aren’t estimating your taxes accurately during the year. Along with having to make a large payment to catch up, that usually comes with having to pay penalties, which can add up fast.
By partnering with an accountant, you can find out how much you should be paying or withholding throughout the year. In turn, you can avoid the large catch-up payments and the penalties that usually come with being behind.
7. You’re Going to Sell Your Business
Selling a business isn’t as straightforward as it seems. How you structure the deal matters, and making the wrong choice could mean missing out on a lot of income from the profits of the sale.
Working with an accountant allows you to learn more about your available options for structuring the deal. Plus, you can see how the sale impacts your financial life, such as the taxes you’ll owe. That way, you can prepare for the outcome in advance, making it easier to remain realistic about what the sale will get you and what you’ll need to do to manage the financial complexities that come with it.
8. You’re Facing an Audit
Audits are stressful and complicated, as your financial life ends up under a lot of scrutiny. By working with an accountant, they can identify any potential issues that may get revealed during the audit. In turn, you can correct them proactively or at least be prepared for the penalties that are potentially coming, making the outcome less of a surprise.
Plus, the accountant can often let you know what you’ll need to do to get on the right side of things. Again, this allows you to create a plan before the audit occurs, which can make navigating the situation easier than it would be otherwise.
Can you think of any other signs that a person may need an accountant? Did you decide to get an accountant and want to tell others about the experience? Share your thoughts in the comments below.