It’s a common misconception that accountants are only there to file your taxes. A good accountant who’s experienced in your industry can help you manage your cash flow, make better business decisions, and even give you advice on how to grow your company. Here are five of the best business questions to ask an accountant to ensure you’re making the most of their valuable knowledge.
How Can I Better Manage My Cash Flow?
Staying on top of your cash flow is essential if you want your business to be successful. If you experience an extended cash flow shortage, you could have trouble meeting your financial obligations or even go bankrupt.
Your accountant can help prevent that from happening by identifying budgeting problems before they spiral out of control. They can also suggest potential solutions to get you back in the black.
How Can I Prepare for Tax Season?
As a business owner, you don’t want to be scrambling to organize your records a week or two before the filing deadline. So one of the best business questions you can ask your accountant is what information they need to do your taxes. Once you know which documents are needed, you can get them together well in advance.
If you’re not sure what kind of records you need to keep, your accountant can fill you in. They’ll also have suggestions on how you can efficiently manage your books, like getting accounting software that links to your business bank account instead of recording transactions by hand.
What Deductions Can I Take?
Taking deductions can lower your tax burden and allow you to keep more money in your pocket. Your accountant will know what types of deductions and industry-specific tax credits you’re allowed to claim. For example, if your business conducts research to develop innovative products and services, you may be eligible for the research and experimentation tax credit.
Your accountant can also advise you on how to properly document your business expenses. They’ll be able to tell you how long you’ll need to hold onto your receipts in case you get audited.
How Much Is My Business Worth?
Knowing how much your business is worth is important even if you’re not trying to sell it. Getting a valuation done can help you understand which aspects of your company are creating the most value, like your marketing strategy or R&D department. As a result, you’ll have a better idea of where to focus your efforts in order to maximize your profits.
Having an accountant assess your business can also reveal places where you’re losing money, like inventory management. Shoring up these weaknesses will make your company even more valuable in the future.
Another good reason to know how much your company is worth is debt. Your business could be at risk if it has too much debt relative to its available capital. After a review of your business, your accountant may be able to tell you if you’re overleveraged. Then you can take steps to fix it before it becomes a bigger problem.
How Will This Business Decision Affect My Finances?
Every decision you make, from purchasing new equipment to taking on an extra employee, affects your company’s finances. Your accountant can help you decide if it’s the right time to rent a bigger office space, or if doing so would negatively affect your cash flow.
Your accountant is a valuable asset to your company. Instead of meeting with them once or twice a year, consider having regular check-ins to get their input on business decisions. Leveraging their financial knowledge will likely lead to higher profits.