Do You Need an Accountant?
Stacy Perez is a typical new business owner. She's a sole proprietor, she doesn't have any employees yet, and she uses an accounting professional only to do her taxes. "I'm not big enough for an accountant-it's just me right now," says the 31-year-old owner of Dot Com Mommies, a Hanover Park, Illinois, company that lists legitimate business and work-at-home opportunities on its Web site. "But when I start hiring people, then I think I'll need one."
Currently, all Perez's money goes toward paying bills, she explains, and her sales are not such that she needs the professional services of an accountant. She currently uses only a Microsoft Excel spreadsheet to keep track of company expenses and income. But should she reach her goal of $10,000 in monthly revenues-which could happen once her new e-books hit the market-she says that could trigger the need for both an accountant and a business advisor.
Obviously, not everyone needs or wants to hire an accountant from the get-go. But what if you do hire someone right away? Take Kimberly Paternoster, co-founder of BigMop.com Inc., a Fremont, California, Web portal serving the janitorial industry. She pulled an accountant into her venture from the very start in 1999 by agreeing to exchange an equity stake in her company for Black's expertise. Not only did the arrangement save money for Paternoster, co-founder David Black and her brother/co-founder Jonathan, but it has provided other benefits as well: "We initially thought we needed an accountant to put together a strict business plan and budget, because we didn't want to start our company by getting [venture capital]," says the 33-year-old Kimberly, the company's Chief Technology Officer. "Dave has ended up being our checks and balances. When somebody spends something and submits an expense report to [him], he makes sure there was a good reason for the expense."
Given those scenarios, what's the right approach for you? What can an accountant do for your start-up, besides filing your taxes and helping you set up your bookkeeping system? According to Tom Bargsley, an Austin, Texas, CPA, an accountant can help you on several fronts-for instance, by helping you decide whether to lease or buy equipment, helping you price your product or service, and serving as a resource and filter for what's happening on the expense and budget side of your business. "If you look at it as an expense, then you're not looking at it correctly," says Bargley of the decision to utilize an accountant. "You have to look at an accountant as an investment-as someone who can help the organization."
If you go beyond an accountant and choose a certified public accountant (CPA), you're getting an additional level of expertise, says Bargsley: "A CPA can compile a review or audit that offers an opinion on the financial condition of your company. If you need to go to a third party like a bank [for financing], you want the credibility of that statement."
Perhaps the biggest value an accountant or CPA can add to your business is an objective set of eyes as well as the expertise to help you make strategic financial decisions for your business. And that could mean the difference between going belly up and soaring toward profitability.