Photo: Creative Commons License

You wouldn’t conduct surgery on yourself, would you?  Then why try to do something you aren’t qualified or educated to do?  As the final part of our Accounting 101 series, I’m going to recommend that you hire a professional, or a group of professionals to help with your accounting and taxes.

Knowing your Numbers Step #11: Hire Professionals

I’m a firm believer in hiring professionals to do things that you aren’t skilled at doing.  It’s understandable that when you are starting out, or when finances are tight, that you may not be able to hire everyone all of these accounting professionals.  But, you should pick some pros to help you out, particularly where legal issues are involved.

In order of importance, you should hire the following accounting professionals:

Tax Accountant CPA

You MUST hire a tax accountant unless you have tax education.  (Software such as Turbo Tax can be helpful as an alternative to doing your taxes but the software will not be able to give you guidance on organization structure.)  Here’s why you should hire a tax professional:  Tax forms can be complicated.  And tax rulings constantly change.  Once you have a business, a home, children, etc. this can become very convoluted (if not confusing).  I recommend that you seek a tax accountant that is a CPA.  This is a professional, certified by their state, that has the education, experience, and credentials to do your taxes.  I recommend asking colleagues in your area for recommendations.  Tax accountants will do the following:

  • Counsel you on the best form of organizational structure: sole proprietorship, LLC, S-Corp, Corporation.
  • Prepare your income taxes
  • Advise you on how you can pay less taxes / Educate you on tax write-offs

Bookkeeper

A bookkeeper is an accountant that typically inputs your transactions.  This person will ask for your invoices and receipts and will input them into a program such as Quickbooks.  A bookkeeper is sometimes a CPA, but does not have to be.  You will want to ensure they have solid experience. And, you will want to get a strong referral from others.  Because you are entrusting your financial records with this person, you need to make sure this is a solid individual.

Financial Consultant and/or Strategist

A financial consultant can be hired to review your financial statements and identify ways to improve your business model.  A strategist can look at your financial statements and areas of improvement: how to increase your revenue, how to decrease costs and expenses, how to increase your profit margin.  A consultant or strategist will identify weak areas that are preventing you from increased profitability.

Hiring Pros…

We expect our clients to hire professionals, yet we don’t always do the same.  We insist that engaged couples hire photographers instead of their Uncle Jack, yet we do our own taxes.  We don’t understand how someone would not hire a wedding planner, yet we do all of our accounting.  Sometimes some things are better left to the pros… the accounting pros.  Know when it’s best to hire someone.