As entrepreneurs, we are experts in our area of product or service, but we have a lot of blind spots and lack of experience when it comes to running a business and financial strategy.
Businesses with industry-leading products and services fail all the time. In fact, the reasons businesses fail are hardly ever related to an inferior product or service and are almost always related to the mismanagement of funds, a poor financial decision, or a lack of financial strategy.
That’s why it’s essential to have an entrepreneurial accountant on your side once you’ve proven there’s a market for your product or service.
How An Entrepreneurial Accountant is Critical to your Business’s Success
Eight reasons why your business needs an entrepreneurial accountant.
1. Know Your Numbers in Real-time.
Many entrepreneurs wrongfully assume they only need to engage an accountant at year-end to prepare their tax returns and financial statements. At that point, an accountant can only give you a ‘post-mortem’ of how your business did the previous year. If you had an accountant that could give you real-time accounting, financial, tax and general business advice, you would make more optimal decisions throughout the year. Accountants can give you the following insights into your business in real-time:
- How much cash do you currently have available?
- Projected cash flow for the next month, quarter and year.
- The benefit of putting your excess cash into marketable securities.
- Expected return on investment for your potential or latest capital asset purchase.
- Aging accounts receivable – should you be concerned.
- Value of the inventory you’re carrying, and is it too much.
- Should you offer vendor financing to clients; and,
- The list goes on…
2. Sanity Check on Partnerships, Mergers and Acquisitions
As entrepreneurs, we know that the possibility of partnering, merging with or acquiring another business can be exciting. This excitement can blind us to critical decision factors that would not only sink the deal but our own business as well. An entrepreneurial accountant will show you the best way to determine the value of the deal so you don’t overpay. They will also help you with the due-diligence process to confirm the veracity of the financial information you’re using to make your decisions.
No entrepreneur wants to be in a situation where they make a decision on a set of financial information that turns out not only to be inaccurate but deliberately misleading.
3. Stay Up-to-date and Compliant with Governmental Obligations
At what point are you required to start collecting GST from your clients? Should you remit this money monthly, quarterly, or yearly? Are you remitting the correct amount of CPP, EI, provincial and federal income tax to the government? Did you know they charge you a penalty for each day you’re late filing your payroll remittance? Have you filed your T2 correctly?
These are all important government regulatory obligations each entrepreneur must ensure they are not only meeting but that what they provide is accurate. The last thing an entrepreneur needs or wants is the government auditing their business and determining they owe more money. An entrepreneurial accountant will keep you onside with the government so you can focus on building your business.
(Did you know we’re the only accounting firm in Canada that guarantees every client the on-call support of a CPA who is also a seasoned entrepreneur? Learn more)
4. Understanding the Complex Relationship between You and Your Business
You will need (and want) some of your business profits to be transferred to you at some point so you can use them in your personal life. Should it be transferred to you as income, dividends, or a combination of both? These are important questions, especially if you plan to make a big personal investment. For example, are you looking at getting a mortgage to purchase a property? How you’re paying yourself now may make it hard to qualify for a mortgage.
An entrepreneurial accountant will help you navigate month to month and year to year to help you find the most tax-efficient way to pay yourself so you can enjoy the benefits of your hard work.
5. Where and When to Invest Your Profits
You’re an entrepreneur who is generating enough profits to cover your business and personal expenses – now what? What should you do with this excess cash from profits? Save it for a rainy day? Hire more people? Invest in equipment? Buy a building? Go on vacation? Train your team? Sure, having profit is a good ‘problem’ to have, but for the conscientious and strategic entrepreneur, the desire to make the right move with profits can be paralyzing! An entrepreneurial accountant can help you determine the most useful place to put your excess cash.
Entrepreneurial accountants not only help you ask the right questions, but they will also help you get the most educated answer.
(Wondering if you’ve outgrown your current accounting firm? Read our FAQs to find out how to tell)
6. Have Confidence in Your Budgets, Cashflow Forecast and Plans for Growth
Cashflow is the lifeblood of any business. We can’t overemphasize that point. It doesn’t matter how much revenue you make if you have no cash to operate your business.
However, most business owners don’t have a budget for cash flow or a cashflow forecast. They hope that doing the same things that got them through yesterday will get them through today.
This is the vast majority of entrepreneurs, not just you! Having an accountant experienced in entrepreneurship can give you peace of mind knowing your budget and cash flow numbers are accurate and aligned with your personal and business growth goals.
7. The cornerstone of Your ‘Mastermind’
Having a trusted entrepreneurial accountant will lead to connections to other like-minded professionals. These connections will further add tools to your toolbox as you diligently grow your business. Need legal advice? Your entrepreneurial accountant will know lawyers they trust and feel confident recommending to you. Looking for private investment in your business? Your entrepreneurial accountant will know of individual investors, private equity, or financial institutions they can connect you with.
As an entrepreneur, you need to surround yourself with those who are where you want to be, have been in your situation and are experts in their field. An entrepreneurial accountant who knows you, your goals, and your business will form the cornerstone of your business Mastermind that guides your business forward.
8. Pull the Most Effective Profit Leavers
With a finite amount of time to spend on your business, you need to know what areas to focus on to increase profitability. An entrepreneurial accountant can show you how a simple pricing change, cutting low-value costs or how ensuring optimal inventory levels can have an outsized impact on the profitability of your business.
How Provision CPA Can Help with Better Business Decision-Making
Provision CPA is an accounting firm where our accountants are also entrepreneurs. We know where you are in your business because we have been there ourselves. If you want to have confidence in your financial numbers and the direction of your business, Provision CPA is here for you.
Contact us today to find out more about how we can help you grow your business.
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