Accounting and taxes: When should you get help?

When you start a business, it is common to do back office tasks such as bookkeeping and tax returns yourself. This can work for a period of time, but the lack of dedicated support can lead to serious problems at some point. While you may not be ready to hire a full-time in-house accountant or tax advisor, there are three warning signs that it's time to outsource these tasks.

Red Flag 1: miss deadlines

Taxing small businesses can quickly become complicated. It's wise not to wait until a letter arrives from the tax office or a state tax agency, which can happen if you default on your company's tax obligations.

There are many aspects to consider and missing a deadline can result in penalties. Payments that are too low can also result in additional penalties and interest. To ensure that the correct amount of tax is actually paid, it must first be ensured that the accounting is in order.

Ideally, accounting should be completed every month (by recording, reconciling, and approving transactions). Accounting must be completed annually before the tax return is filed.

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Red Flag 2: Lack of time

Some small business owners don't immediately notice when the time spent on bookkeeping becomes too much. As a founder, you necessarily wear many hats, including those of the “accountant” and the “tax expert.” However, if these tasks are blocking other important things, it might be a good idea to remove accounting from the list of tasks.

Accounting requires a lot of specialist knowledge and attention, which is why it is a difficult and time-consuming task for many founders. Can you learn to keep proper bookkeeping and fill out tax returns for small businesses? Absolutely. There are numerous courses and software solutions available that can help. But is this a useful use of one's time? Not necessarily.

As a founder, you have a unique overview of the company's status and prospects. This means that a lot of time is spent on tasks that could easily be outsourced. If you could make better use of the time spent sending invoices, tracking expenses, reconciling transactions, and completing tax returns to build your business, it might be time to stop doing the bookkeeping yourself.

Red Flag 3: Uncertainty about the correctness of accounting

If the accounting is not in order, it has an impact on various areas of the company. Tax mistakes (and their consequences) can be very annoying, but those aren't the only issues. Without a comprehensive understanding of the company's financial situation, it is difficult to make important strategic decisions.

Companies can make excellent products, offer impressive services, and have an ever-growing customer base — and yet there can be a cash squeeze if they don't carefully monitor their finances. Without up-to-date accounting, accurate forecasts of income and expenditure cannot be made and it is not clear how much can be invested in the company. It is difficult to find investors or a bank who are willing to provide money if the accounting is incorrect.

A dedicated accounting service can ensure that books are completed correctly and on time each month to ensure that accurate financial data is available on time. As a result, decisions can be made based on business reality and not based on estimates. An additional advantage is that tax returns are much easier to file.

conclusion

When accounting is taking too much time to manage or bookkeeping and tax returns are getting out of hand, it's time to stop home improvement. Outsourcing can help prevent mistakes, save time, and ensure that decisions can be made on a solid financial basis.

Numarics is the digital trustee that provides a All-in-one solution via app provides. Tailored for start-ups and SMEs in growth.

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