So, what is an accountant?
You might be conjuring up a textbook image of an individual with glasses, and a pressed suit, green eyeshade visor, and an abacus in-hand. First of all, this is a stereotype that we can 100% attest to is fake news—the only suits our team is wearing these days are sweatsuits (and looking quite good in them, btw). It’s time to relieve all your curiosities about accountants, hiring accountants, accounting for your small business, as well as dating an accountant (kidding, kind of). You might not think you need one because it’s an expense your small business can put off. However, that’s not true. Let’s talk about some of these issues, so you get crystal clear on what your accounting needs are.
99 Problems, But an Accountant Ain’t One
First, the bad news- there are many, many, many potential problems with DIY accounting. Remember that time in middle school when you had to balance a pretend checkbook? Not cute. But now, we’re talking about real-life money here. Go ahead and make yourself some coffee; we’ve got some work ahead of us.
1. Inaccurate business costs tracking
Maybe the ins and outs of business finances aren’t your cup of whisky. Maybe your bundle of glitter gel pens was omitted from your expenses. Maybe the person responsible for tracking your business costs was just not that trustworthy. Maybe you tend to be your own worst enemy and overestimate your capabilities. *gasp* Yes, things can fall apart, and the numbers won’t align like the stars in your birth chart. This can make or break your small business.
2. Mixing business with pleasure
This is huge. Do not mix or mingle your personal accounts with your business accounts. So, why is this necessary? You don’t want to go broke because you took too much out of your savings and now your personal life is now a black hole of darkness. If the business has financial issues, it’ll be a business problem, not a life problem. Repeat it: separate personal finances from business.
3. Not in the cash flow
More than anything, we want you to be in the flow—love, peace, abundance, stacks of cash. Money flows in and out, but does that mean you have money in the bag? Sorry sweetie, no. Money management is super important when it comes to accounting for small businesses. Where is it going? How is it being spent? Where can you cut down on spending? Let’s not underestimate this. It’s best to have a plan and creating one can be challenging. Sometimes you need some help. *raises hand* At the end of the day, what you want is a positive cash flow, but losing it all is always a possibility. Know your flow.
4. Ghosting the taxman
If you are not feeling your Bumble match, by all means, ghost away. When it comes to taxes, you got to pay. It’s the law! We don’t want to scream at you in all caps, but we are desperately and gently telling you to PAY YOUR TAXES. If not, you’ll have to pay fines like the failure-to-file penalty. And file on time! The later you file your taxes, the higher the penalty, so keep that taxation procrastination out of your business, please.
A Brief Account on Accountants
Let’s jump into who these magical accountant creatures are—they live, breath, sleep, eat, and do usual stuff just like you and me. No, really! Sometimes they even like to get a little crazy and drop it low. Now that’s out of the way, let’s take a more in-depth look at what makes an accountant an accountant.
An accountant is almost the fairy godmother of money, a professional who manages your bookkeeping and prepares your finances. That’s right; they bippity-boppity-boo your bank account (and ultimately turn your rags into couture ballgowns). All sounds good, but what about accounting for your small business? First, you wouldn’t assign little birds and mice to run your company because *ahem* these adorable woodland creatures (or household pests, we respect your POV) are not adept with those tiny hands. Imagine the hand-eye coordination they’d need to sew something so intricate.
Similarly, you don’t want to assign an employee your accounting if they are also not adept at bookkeeping. Your accountant can advise on business structure, issue invoices, record sales, and manage payrolls and invoices from suppliers. This is also their specialty, so they’ll be on top of tax law changes and can create reports on your business’s financial well-being. Let them work their magic! They’ll get you to the castle, and you’ll be the belle of the ball.
Alright, now that you know all about accountants, it’s Q&A time, kiddos.
When should I start manifesting my own accountant?
Good one. The more you have, the more responsibilities you take on. This means making more than $200,000, leaving an inheritance to your kids, owning rental properties, receiving large capital gains, or owning a business. If you’re raking in a lot of cash and own your small business (yes, look at you), you should definitely get an accountant. ASAP. A specialist will review and structure your finances to ensure you do things the right way. Let’s say you’ve experienced some significant life changes such as: brought a human into the world, married or divorced a human, or bought a yacht from a human, you need an accountant. Their expertise can make all the difference in how these life-changing events can affect your finances.
How much does an accountant go for these days?
Another solid question. Remember, it takes money to make money. Not that most exciting, but that’s business for you. Well, the cost of an accountant depends on your situation and what tax forms you must file. However, the average cost of hiring a certified public accountant (CPA) to prepare and submit a Form 1040 and state return without any itemized deductions is $176. The average fee for an itemized Form-1040 and state tax return is $273. Let’s say you’re self-employed, which means a CPA will prepare an itemized Form 1040 with a Schedule C and a state tax return form, coming up to about $457. These are averages mind you. Sniff around and ask an accountant you are interested in working with the cost for a more accurate answer.
Why can’t I do my own accounting, though?
You can be your own anything! As long as you love yourself first. But, DIYing your books is a lot harder than it looks. You know when you watch YouTube videos of people decorating epic cakes, and you’re like, “I can do that,” and then you can’t? It’s like that. You have decisions to make as the head of the team, the captain of your ship if you will. There are so many things to take care of to ensure your business has a smooth journey. How about we leave the money management to the pros? You’ve got more pressing matters—like royal icing.
What qualifications should my accountant have?
Keep them coming! Although you might be searching for a “certified freak, 7-days a week” (yes, Cardi B), you can probably lower your standards in that regard. You’ll need a certified and qualified accountant available to answer any questions and concerns you might have. As an accountant, one has many responsibilities, from bookkeeping systems to storing data, preparing financial statements, and legal considerations. This can potentially be you if you are ambitious enough to take on the challenge, but it doesn’t mean it will be you. That’s because lots of work goes into becoming an accountant—including a college degree, certificates, voted class clown, etc. You’ll want an accountant that is organized and can effectively communicate with you. Accountants also help the business by figuring out and making suggestions of how to do better business. Look for someone whose qualifications and specializations meet your needs.
Are all accountants good at math?
When we think accountants, we think of numbers. And when we think numbers, we think math. That brings us to the question: are all accountants math whizzes? While it does help to be good at math, it’s not a requirement. An accountant must make countless calculations based on formulas; however, since the world’s gotten so digital, many tools help accountants do their jobs. That’s why there is no need to worry if they aren’t human calculators or can’t recite over 100 numbers in pi. As long as an accountant can apply and understand financial equations, and of course, are certified, they will kindly lead you down the right path.
How much do accountants make?
That’s an interesting one. Well, wouldn’t you like to know! Especially businesses considering hiring an in-house accountant. Also, psst, it’s okay to be nosy in this instance. An accountant’s annual salaries depend on many factors such as education, experience, state of residence, and the size of the company for which they are working. According to the Bureau of Labor Statistics, an accountant’s average pay in 2017 was $69,350 a year. A certified public accountant (CPA) made an average of about $119,000 a year. Accountants work hard to earn their keep. They do so much for others. All the complicated, hard stuff that might be difficult to understand. An accountant can help you lower your taxes and plan for the future. Get those deductions you deserve! An accountant shines a bright light on the finances of a business.
Meet Your Fairy Godmother/Accountant
Nothing’s better than going to sleep knowing you’ve been sprinkled with magical dust and your small business is safe and secure. If an accountant for your small business gives you a good night of sleep, get ready to sleep like a baby. For all you know, your new accountant can totally be your financial fairy godmother (or father, we are all about inclusivity). The point is this is a relationship that should be invested in for the long-term. If you’re ready to embark towards the castle of dreams, our Alchemy Accounting team has many fairy god people that could be the one for you. We’ll help you take your small business into a new realm by advocating for your “happily ever after.” And don’t worry, our magic lasts well beyond the stroke of midnight.