Accountant for Small Business

Posted on August 5, 2021

There are over 1.3 million businesses in Canada. Of these, approximately 98% are small businesses or have less than 100 employees. 

When starting a small business, there are many accounting matters and regulations entrepreneurs need to consider. If you're about to start a small business this can be an overwhelming prospect. But an accountant for small business can help ease your fears.

Here are some things you should know as well as consider before you hire a business accountant for your small business.

Do I Need an Accountant for My Small Business?

If you're about to start a business, you might be wondering if you need an accountant. It might be necessary to hire one. A small business accountant can actually help you write your business plan. By doing this, they'll ensure that you fulfill all the requirements needed to start a business, including filing all the necessary paperwork. 

They can also help you decide what type of business ownership is best. There are four in Canada:

  • Sole proprietorship
  • Partnership
  • Corporation
  • Cooperative

The type of ownership you decide on can affect your personal liability, the amount of taxes you pay, and the paperwork needed to file your taxes. In the case of a sole proprietorship, filing your taxes may be straightforward. You probably won't need an accountant especially if you are familiar with accounting tools and formulas.

Once you have this knowledge, you can certainly run your business without an accountant. You might, however, want to invest in accounting software to make the process easier. And just in case the need arises, you should have an accountant on standby in the event you run into any financial situations you're not sure about.

If you do decide to hire an accountant for your small business, it's advisable to hire a Certified Public Accountant or CPA. They are extremely knowledgeable when it comes to tax issues and are accounting experts. It's also a good idea to familiarize yourself with some of the other services they can provide to your business.

What Does an Accountant Do?

An accountant can also assist with other small business accounting services including:

Budget Development and Cash Flow Management

An accountant can help you to plan and develop a budget. They will look at your expenses, debts, and cash flow. They can analyze your business and ensure you meet your cash flow projections.

Tax Planning

Small business tax accountants can guide you on the various tax planning strategies you can use. Depending on which you choose, you can save money and lessen your tax liabilities.

Payroll

Payroll processing is an important part of every business. However, it can be challenging. There can be consequences if you don't get it right the first time and an accountant can ensure you do.

Other Accountant Services

Some other services accountants provide for small businesses include:

  • Accounts Payable and Accounts Receivable
  • Business Plan Development
  • Incorporation Assistance
  • Preparation of Financial Statements
  • Tax Return Preparation
  • HR and Employee Benefits
  • Accounting and Payroll Software Recommendations

Some small businesses may have budgetary constraints. So unlike larger businesses you may not be able to have an in-house accountant. If you're concerned about costs, you can use an accountant when required.

They can help you to set up the financial aspects of your business. Then you can hire a bookkeeper to record your day-to-day financial transactions. This will ensure your accounting system is in order.

This will be a great benefit when you need to bring in an accountant for other services including tax preparation.

When Should I Hire an Accountant for My Small Business?

As mentioned above, you should hire an accountant to help you set up your business. Once you're established and up and running, you can choose to use a bookkeeper for the day-to-day recording of transactions. You may even choose to use software that can assist in this process. 

However, there are specific elements of a business that can determine its financial health. The analysis and interpretation of these will require the skills of an accountant. 

These include:

Financial Analysis 

This involves examining a company's past financial performance. It compares budgets to actual results. It also provides the data a small business will need to make financial forecasts. Small businesses should analyze their finances weekly to understand and monitor the health of their business.

Financial Reporting

This is also important for a small business as it determines if a business is making a profit or not. The three essential reports your business should use to keep track of finances are the cash flow statement, the balance sheet, and the income statement. 

Decision Making

Accountants interpret the information gathered during financial analysis and reporting to help a business make financial decisions. The aim is to ensure the company is on the right track in meeting its financial goals.

How to Find an Accountant for Small Business

The Chartered Professional Accountants of Canada (CPA Canada) has a membership of over 217,000 accountants. That's a lot of accountants to choose from. So where should you start when you're looking for small business accounting services?

There are many resources available that can help you find a reputable accountant in Canada. Here are a few:

Upwork

This is an online platform where businesses can find great talent. It includes freelancers, agencies, and independent talent from around the world, including Canada. The site is easy to use. You can sign up, post the requirements you're looking for and shortlist appropriate candidates.

Accountor

This site also connects businesses with over 2,200 specialists. They also provide financial and human resource (HR) services including software and outsourcing.

CPA Ontario

Provides a variety of directories that include listings of members, firms, and licensed public accountants. All listings include members in good standing. This ensures that you can find an experienced accountant or firm.

When looking for an accountant you should also find out:

  • Their qualifications
  • If they have relevant experience
  • What accounting services they provide

It's also important to research the company or person you're hiring. Get reviews or testimonials. A past or current client's experience is the best way to find out how good an accountant is.

How Much Do Accountants Make?

The average yearly salary of an accountant in Canada is $52,081. The amount they make is dependent on their level of experience. Entry-level accountants or those with less than a year of experience earn about $42,902 per year.

Accountants with one to four years of experience earn roughly $49,511. While an experienced accountant with 10 to 19 years of experience can make as much as $60,799.

There are several designations in the accounting field with each based on specific educational requirements:

  • Chartered Professional Accountant (CPA) 
  • Chartered Accountant (CA) 
  • Certified General Accountant 
  • Certified Management Accountant 

All require extensive education including a university degree and certification. In addition, accountants need to be detail-oriented. They need to be experts when it comes to accuracy and compliance. They also require managerial, analytical, planning, research, and communication skills among others.

It's an extensive list of qualifications and expertise which is probably the reason their services can be costly.

How Much Is an Accountant Going to Cost?

Accounting fees can vary in Canada. They range between $150 to $400 per hour. What you're actually charged will be dependent on the work required, the experience of the accountant, and the size of the firm they work for, if any.

Although costly, it's easy to understand why. A candidate can spend several years becoming a professional accountant. In addition, when it comes to credentialing exams, according to the Surgent CPA Review, the Uniform CPA exam is one of the most difficult. The exam pass rate is about 50%.

Candidates get three attempts to pass the exam. When you hire a chartered professional accountant, you can be sure you'll get someone who is dedicated, determined, and well-educated.

How Will I Know if My Accountant Is Doing Their Job?

If your company's books are in order, you're making a profit and you haven't been audited by the Canada Revenue Agency (CRA), then your accountant is doing a good job. 

If your accountant also has the following qualities, there is a greater likelihood they'll be proficient.

  • Good communication skills
  • Vigilant
  • Service-oriented
  • Exceptional organizational skills
  • Innovative 
  • Good foresight
  • Reliable
  • Trustworthy

You should feel comfortable enough with whomever you hire. This will allow you to ask questions. They should be able to impart enough of their knowledge that you have a good understanding of the financial health of your business and what you need to do to sustain it.

Be aware of any accountant who misrepresents his/her qualifications, condones the falsification of documents, or tax evasion. It's also a red flag if they don't anticipate your company's financial needs. 

Partnering for the Financial Health of Your Business

No one wants their business to fail. However, sometimes this can be inevitable. But there are certain measures you can put in place to help ensure this doesn't happen to your business.

Just because you own a business, doesn't mean you have the expertise in every area. Don't be afraid to hire professionals that can assist you. This might include looking for an accountant for small business.

An accountant can guide you through your business plan, help determine the business ownership you require, and take care of your financial and accounting needs. Insurdinary can also help you with some of your other business needs such as loans, credit cards and mortgages for your office space. Visit us today. We look forward to working with you.

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