If you have QuickBooks, you may still need an accountant. Here are three reasons why having an accountant, even if you use QuickBooks, is a great idea.
If you have a clogged drain, do you need to call a plumber? Maybe, but maybe not. However, when you’re building a new house, you have a layout of your plumbing needs as part of the design phase, well before you build the house. The same idea is true when it comes to accounting needs for your business.
When you start a new business, an accountant can help you identify the most helpful chart of accounts that makes sense for your business. You want your financial information to flow properly and be accounted for accurately. When tax time rolls around, you want to be able to identify the activities that can be deducted. This will help you save money and limit your tax liability. Once you get the hang of things, sometimes you need a checkup to ensure you stay on track. These check-ins can help when you experience a “clog,” so to speak, that prevents the proper flow of information.
So, how do you keep yourself from making emergency plumbing calls to an accountant? Here are three reasons why you need an accountant, even when you have QuickBooks.
You need an accountant to confirm your records
QuickBooks is user-friendly. It automatically books the double-entry, meaning debit and credit. For example, when you write a check to pay the utility bill and enter utilities expense, QuickBooks makes the entry hitting both the checking account and the utility expense account. It does not allow the debit to not equal the credit. However, you can mistakenly choose the wrong account and QuickBooks will not identify the error. The debit will equal the credit, but it will not know to correct the account.
Say your business purchases equipment for $5,000. You write a check marking equipment expense, and then you think you’re done. However, there are rules to assess based on the type of equipment you’ve purchased. Most likely, you should account for this as an asset on your balance sheet, and not an activity fully expensed in the year it was purchased. Equipment purchases like these are called capitalized assets. The initial entry is then affecting your balance sheet verses the income statement. However, capitalized assets are depreciated and thus expensed over a period of time. Therefore, further entries are made over time to slowly expense the asset.
There are various other instances where the entry made is not always a simple answer and further details are needed to make the proper accounting entry. This is when having an accountant to turn to is beneficial.
You need an accountant to ensure compliance
There are various areas of compliance that accountants need to pay attention to. Some of these areas include tax filings, payroll-related filings, and tax rules for depreciating and amortizing. QuickBooks assists by providing information to perform these functions, but again, QuickBooks will not detect errors and confirm the filings are complete and accurate. You need an accountant to ensure compliance.
A perfect illustration of this is when an accountant performs the annual tax return. Once an accountant confirms that the records are accurate, they use that financial information to perform an annual tax return. If income and expenses are not appropriately stated, the reporting would cause inaccurate results on the tax return. Inaccurate results mean potential fines and penalties. It is not only important to file accurately, but also in a timely manner. An accountant would be able to keep you on track with all of your filing requirements.
In relation to the above records entry for capitalizing assets, different assets are depreciated using different rules. Your accountant will ensure you are properly reflecting the net value of the assets on your books by complying with the current tax guidance.
You need an accountant to provide guidance
Accountants are trained in what to look for and ask about to assist business owners, not only in day-to-day activities, like ensuring your balance sheet is updated, but also looking at trends and noticing when a pattern reveals something has changed. Accountants also know the right questions to ask that will better help them guide the organization and assist management. Your accountants can advise you on how to segment information in QuickBooks to best identify business segment profitability. You can quickly identify which business segments aren’t worth your additional investment, and focus on the segments that are performing well for you. Or, your accountant can help you figure out where to best invest your money, time, and further training to get under-performing business segments on track.
In the end, you need accountants to provide value to your business. They will help you ensure proper records, compliance, and offer guidance to help you run your business better. As a business owner, you can’t know and see everything, so your accountant is your extra set of eyes. Accountants have experience to enhance the financial aspects of your business.
All things flow together, but in order for them to flow smoothly, you need an accountant. Don’t get clogged up. Let Chortek keep you flowing, so you can do what you do best. Contact us for more information on our QuickBooks services.