What Do Accountants Do for Small Businesses?

An accountant is an indispensable part of operating a small business. Accountants provide financial services to owners and entrepreneurs, including tax advisory, state and federal compliance, and more, all to minimize a business's overall tax burden. 

Whether you're an experienced owner or just starting, this blog provides a high-level overview of what accountants do, their responsibilities, and their different accounting services. Whether you're on the fence about hiring one or have just started to think about accountant help, this guide illustrates the potential of using an accountant for your small business.

What is an accountant?

So what's the purpose of an accountant? An accountant is responsible for carrying out duties related to a small business's finances. They may provide a single service, such as business tax preparation, or an array of services calibrated to save money and aid the business's long-term growth. With many first-year businesses paying more than they have to in taxes, it's never too early to consider hiring an accountant. 

Beyond the service, great accountants provide intangibles, such as peace of mind. They unburden small business owners so they can focus on developing and growing other aspects of the business without distractions about finances or agonizing over vital business decisions. Accountants help make the tough stuff more palatable so that you can run your business. 

What does an accountant do for businesses? 

Depending on your budget and requirements, an accountant can provide a single financial service or many. Some of the more popular services an accountant can provide to your small business includes the following: 

• Business tax preparation. Your accountant can prepare and file business taxes on your behalf, minimizing your tax burden. 
• Entity structure advisory. If you aren't structured properly, you could be paying more than you must in taxes. Your accountant can evaluate how your business is structured and make changes if appropriate.
• Financial reporting. Your accountant can also track performance and create reports based on that data that aid in vital decision-making. 
• Tax changes and trends. What are the new tax laws, and how do they affect your small business? Your accountant stays on top of changes and updates to tax law and adjusts strategy accordingly.

This is only a glimpse into the services an accountant can provide to your small business. There are many more, and while some services are deemed more critical than others, all are useful and contribute positively to your organization. 

Different types of accountants

Different types of accountants may provide more general accounting services or focus narrowly on a specific job function or industry. Some of the more commonly used accountant types include the following: 

• Certified Public Accountant (CPA). CPAs are licensed professionals who must adhere to rigorous requirements and principles. They can prepare and submit taxes, represent your business during an audit, and more. 
• In-house Accountant. This type of accountant is usually hired as a W-2 employee and will solely focus on the financials of their employer.
• Enrolled Agent (EA). While EAs do not have to meet the requirements of a CPA, they must still pass an exam and complete continuing education courses to maintain their license. 
• Forensic Accountant. Forensic accountants are usually hired when something is wrong, like potential fraud. A forensic accountant's trained eye will find fraud and other issues if they exist. 

The nature of your industry and location can dictate which type of accountant is best for your small business. You will work with a qualified professional regardless of your chosen accountant type.

Accountant's roles and responsibilities

An accountant's responsibilities will differ from company to company. Some will have many accountant duties, while others might provide a narrower service. Whichever you choose, they ensure your financials are accurate and legally comply with state and federal laws. Here are some of the basic functions of an accountant.

Bookkeeping

Bookkeeping ensures your business transactions are categorized accurately, and your accounts are reconciled. Your books will give you an up-to-the-minute glimpse of your financial status. 

Financial analysis and reporting

Your accountant will analyze and contextualize your financial data into easy-to-understand reporting. This helps you grasp where your business stands in the market, making attracting outside investors easier and more. 

Tax prep and planning

One of the top reasons a small business uses an accountant is tax preparation. Whether it's quarterly estimated taxes or year-end, your accountant will prepare and file your business taxes on your behalf. Year-round tax planning is less common but can help your small business reduce its tax liability while remaining compliant throughout the year.  

Compliance and regulatory guidance

Maintaining state and federal regulatory compliance will be one of your accountant's top responsibilities. Falling out of compliance can open your business to fines and increased scrutiny from the IRS.  

Business growth and strategic planning 

Your accountant can support your business's long-term growth with strategic tax planning. This allows your accountant to be proactive about your year-round tax savings while adjusting throughout the year based on market conditions and other considerations. 

Impact an Accountant can have on a business

Whether it's tax preparation, strategic planning, compliance, or any other services an accountant can provide, they will positively contribute to your business. They'll minimize your overall tax burden and keep you out of the IRS's crosshairs. Their professional services and insight typically end with more money in your pocket. 

This lets you focus on growing other business areas while your accountant handles the financial aspects. 

When and why a business should hire an accountant

While many small businesses start without an accountant, usually for budgetary reasons, hiring one as soon as possible is essential. For example, most small business owners pay more than they should in taxes in their first year. Your accountant ensures overpayments and other growing pains are minimized or eliminated, demonstrating their value and cost-effectiveness immediately. 

Some business owners wait until an event or milestone to hire an accountant. Perhaps they have been around for a few years and want to scale up strategically, or maybe they're applying for a loan or need someone to handle recurring financial responsibilities, such as payroll or tax preparation. 

When a professional is handling your financial duties, the potential for problems and other risks and issues can be avoided, all while giving you more time and keeping more of your money in your pocket. 

How 1-800Accountant can help

There's no downside to having a great accountant on your side. Ensure your taxes are filed accurately and remain compliant by partnering with the experts at 1-800Accountant, America's leading virtual accounting firm for small businesses. 

Our team of experienced EAs, CPAs, and other tax professionals stay on top of the latest tax laws, regulations, and strategies impacting your business. This allows us to keep you compliant, maximize your deductions, and minimize your tax liability.

Whether it's small business taxes, tax advisory, educational content, or any of our professional accounting services, we have the solution you need at a price that works for you. Schedule a quick consultation – usually 30 minutes or less – to learn how we can help.