Two women are discussing something on a laptop. One holds a clipboard. Text in the image reads, "Do You Need an Accountant for Your LLC?" Shelves with items are visible in the background.

You've had that Eureka moment and founded a small business to realize that vision. You've even made it official by forming as a limited liability company business entity, commonly known as an LLC. Congratulations! Now what?

Now it's time to consider taxes and whether your LLC needs an accountant. Because if you don't, you could be leaving money on the table. Many small businesses pay up to double what they should in taxes in their first year of operation. Why? They didn't take the necessary steps to minimize their tax burden, just one area where an accountant can make a substantial difference.

Use this guide to determine whether you need an accountant, the right time to hire one, and the benefits, all in an effort to empower you with the information you need to make the best decision for your business.  

Do LLCs Need Accountants?

Hiring an accountant or certified public accountant (CPA) is not required, but almost every successful business in America wouldn't operate without one. Free DIY accounting software or apps alone don't typically meet their needs. So, generally, yes, LLCs need accountants and CPAs.

Accountants and CPAs are typically financial experts who also handle the preparation and filing of tax returns and the identification of deductions. They produce financial reports to help you better understand your profitability, cash flow, and financial path. Business owners often work with accountants to better grasp their finances at a high level for tax planning, forecasting, and advice.

LLCs might use an accountant or CPA for the following functions: 

  • Analyzing financial information
  • Financial modeling
  • Tax preparation and filing
  • Financial advisory
  • Preparing financial statements
  • When to Hire an Accountant for your LLC

    It's best to hire an accountant as soon as you launch your new business, but that's not always possible for many reasons. Some owners might hold back due to a lack of budget, while others may take a wait-and-see approach due to the likelihood of new business failure. Roughly 20% of new businesses fail within two years of launch, with 45% failing during the first five years. 

    Signs that it might be time to hire an accountant include:

  • You own a multi-member LLC
  • You cover health insurance premiums for your employees
  • You recently altered your business tax classification
  • Your LLC earns $10,000 or more annually 
  • You’re upgrading to new bookkeeping systems
  • You have concerns about maintaining strict financial records
  • Steps for Hiring an Accountant for Your LLC

    A couple of steps are required to identify the accountant that's right for your LLC.

  • Identify your accounting needs. What are your financial pain points? Identify accountants who can cater to your unique requirements. 
  • Do research. Seek word of mouth and read reviews to find reputable accounting candidates familiar with the potential peculiarities of doing taxes in your state and industry.
  • Book consultations. Identify top accounting candidates and book consultations promptly. Be sure to bring along materials and have plenty of questions. Unsure how to prepare? Use this guide to help get you ready.
  • Once you've selected the best accountant for your LLC, there will be an onboarding process that helps ensure your ongoing accounting requirements are addressed. 

    Benefits of Having an Accountant for an LLC

    There are numerous benefits to using an accountant for your LLC. An accountant can calculate and submit your quarterly estimated taxes, do your annual taxes, generate insightful financial reporting, provide strategic advisory, and more.

    This helps your LLC stay compliant while giving you the financial clarity you need to grow your business. Your accountant also keeps up on the latest changes to tax law that can impact your industry and state. They will also advise you on time-sensitive decisions that can lead to substantial tax savings.

    But the ultimate benefit is a minimal tax burden, keeping more of your hard-earned money in your pocket. With a great accountant at your side, you'll never pay more than you have to.   

    What Type of Accountant Is Best for Small Businesses?

    Many accountants are generalists who can serve the needs of a diversity of clients, while others are more narrow in their focus.

    The best type of accountant for small businesses, including LLCs, is calibrated to exclusively serve their needs by providing the financial services and expertise required to grow. Accountants for small businesses do this by minimizing your financial tasks while maximizing your tax savings.  

    However, not every accounting firm for small businesses is created equally. So read reviews and do your due diligence to ensure you've selected the best firm for your LLC. 

    Bookkeeper vs. Accountant: Do LLCs Need Both?

    The role of an accountant typically involves advisory, but they can also do your business taxes, among other duties. Bookkeepers maintain business records, handle payroll taxes, and create invoices. They also handle the critical task of financial reconciliation– ensuring your bank statement matches the records in the general ledger.

    It isn't advisable, yet some LLCs operate without a bookkeeper, accountant, or both. Bookkeepers and accountants are best used in tandem. But if you’re in a scenario where you have enough budget for one or the other, choose the accountant or bookkeeper who can address your immediate needs. If you need support with strategic budgeting to meet IRS requirements and get your tax return done, hire an accountant. Hire a bookkeeper if you need help with your general ledger or tracking your financials.

    When searching for an accountant, you'll want one who specializes in small business accounting. They'll be able to improve various aspects of your business, prepare and file taxes, provide tax advice throughout the year, not just tax time, help you establish a business bank account, and evaluate your business structure to identify additional tax savings. 

    Manage Your LLC's Business Finances and Taxes with 1-800Accountant

    Managing a small business LLC's finances and taxes full-time can be challenging, especially when owners wear multiple hats. That's why so many small business owners, entrepreneurs, and sole proprietors trust 1-800Accountant, America's leading virtual accounting firm for small businesses, to handle their business needs.

    Whether it's tax advisory, quarterly estimated taxes, bookkeeping, entity formation, or any of our professional accounting services, we have an affordable pricing solution to help your business stay compliant. Schedule a quick consultation – usually 30 minutes or less – to learn more.

    This post is to be used for informational purposes only and does not constitute legal, business, or tax advice. Each person should consult his or her own attorney, business advisor, or tax advisor with respect to matters referenced in this post. 1-800Accountant assumes no liability for actions taken in reliance upon the information contained herein.