Get Help Playing the Numbers Game

Many small businesses don't have the volume of financial transactions that necessitate hiring a full-time, or even part-time, bookkeeper or accountant on staff. Then again, the financial situation of their business is such that they could benefit from more regular financial review and planning and up-to-date accounting—instead of leaving every invoice, receipt, and ledger to hand off to the tax preparer at the close of the fiscal year.

Essentially, there are two ways to go: you can hire either an outside or an in-house accountant. An outside accounting firm typically handles:

• tax return preparation;
• preparing financial statements, including the balance sheet, income statement, and statement of cash; and
• analysis or problem-solving advice

The duties and responsibilities of an in-house accountant generally include:

• general ledger/chart of account maintenance,
• responsibility for daily transactions,
• financial statement preparation and analysis,
  
• cost accounting and variance analysis, and
• treasury and cash management, including bank reconciliations.

Hiring an outside accountant or accounting firm on a consulting basis may be a good first step for a growing business. An outside firm can often cost less than the salary and benefits of a full-time employee and, at the same time, you may be getting a higher level of advice from a CPA or a tax accountant, the latter of whom usually is a licensed CPA and a lawyer specializing in tax law. Even with the latest and greatest accounting and tax software, it still may be easier to farm out your financials to a CPA firm that can manage your books online through secure software-as-a-service (SaaS) programs than to maintain those software programs in-house.

When your business grows in revenue, and the transactions become more complicated, it is time to consider hiring a full- or part-time inside accountant. Since the outside accountant's fee grows with the size of the business, you may see some cost savings by bringing some of the work in-house.

Check with colleagues and other professionals about what works for them and compensation level requirements per size of company, responsibilities, and type of industry.

Source: "Choosing the Right Accountant: When Is It Time?" Inc.

Inc. Resource

Business by Numbers

In this video, a reader asks successful entrepreneur and Inc. columnist Norm Brodsky, how to switch from using part-time accountants to a full-time controller.