Can an Accountant Save Your Business Money on Taxes?

Do you use an accountant to prepare your taxes or provide financial advice? If you’re trying to DIY to save some money instead of hiring an accountant, you could be costing yourself more than you save. In one survey, almost half of small business owners surveyed said they had little or no financial literacy before starting their business, and about the same percentage of business owners say they have lost out on at least $10,000 in profits due to their low financial literacy.

Benefits of Hiring an Accountant at Tax Time

Small business owners spend an average of 82 hours on tax compliance each year. That's time that could be spent on your business, and it's likely that the cost of paying a professional to take care of tax preparation is far less than the cost of a tremendous number of your own hours spent on filing taxes and related tasks.

There are lots of other ways hiring an accountant can save you money at tax time.

• Accountants keep up-to-date on the latest tax information so they know which tax deductions you’re entitled to and how to minimize your tax liability. (This is especially important in the wake of recent tax law changes.)

• Accountants know how to keep you out of trouble when you file your taxes and can also serve to represent you before the IRS if you should get audited.

• As they prepare your taxes, accountants will likely notice ways you could do things differently in the coming year to help keep more of your money the next time you file your taxes.

How an Accountant Can Save Your Business Money and Time

Accountants can be valuable for more than just tax preparation, however. In fact, they can be vital partners in all phases of your business.

• Pre-launch stage: As you develop your business plan, you can use an accountant to help create the financial section of your plan and make sure all your numbers add up. This is especially important if you’re trying to get a bank loan or obtain capital from an outside investor. Accountants can also advise you on whether to buy or lease equipment, how to price your products and services, and other key decisions that can help you maximize your startup capital.

• Startup stage: If your business is just getting off the ground, an accountant can help you set up your accounting system, decide whether cash basis or accrual basis accounting is best for your business, and choose the right type of accounting software for your needs. Particularly if you are in a specialized industry, an accountant can be invaluable in helping you choose industry-specific accounting software or even customizing software to your requirements.

• Growth stage: As your company grows, an accountant can help you implement payroll systems when you hire employees, assess the financial impact of different types of employee benefits, generate financial reports and review them with you, and advise you on ways to improve your cash flow.

• Exit stage: You probably don’t want to think about the day when you will leave your business, but accountants can help you prepare for that, too. Hiring an accountant who can advise you on retirement plans and personal investments will help you grow a nest egg. They can also help you maximize the value of your business if selling it is part of your retirement plan.

With so many sophisticated accounting apps available today, and more on the horizon as the use of artificial intelligence grows, it may seem as if you don’t need a flesh-and-blood accountant. However, many small businesses value accountants over accounting software. Not all small business owners feel comfortable sharing sensitive financial information with AI-powered software, for instance, and many don't trust the accuracy of accounting software.

Most small business owners don’t start out with expertise in finances or accounting, but managing your money wisely is one of the most important factors and whether your business succeeds or fails. Having an accountant on your side can make all the difference. Isn’t that worth the cost?

RELATED: Are These Tax Deduction Mistakes Costing Your Small Business Money?