Who Needs Accounting Services the Most?
Figures show that 57 percent of small businesses don’t use an accountant, could that have something to do with the failure rate of businesses in the US?
The fact is, certain types of businesses need an accountant more than others. Here, we’ve compiled a list of the top 10 that need these services most:
You’ve got a great idea, but need angel investors or venture capital to get it off the ground. People may know of your skill in the industry, but not your skills as a manager and administrator. Your investors want a qualified professional keeping an eye on spending. The Huffington Post reported “For every success story that you read, there are 100 who have failed.”
2. Businesses with employees.
Before you roll your eyes, know that the Small Business Administration reports 80 percent of small businesses in America have no employees. That leaves about 5.8 million businesses with employees, meaning tax preparation, tax planning, bookkeeping, reporting and more. They need an accountant.
3. When Financial Statements are Required. Banks and other lenders will require financial statements when extending or renewing loans and lines of credit. They want to see an honest picture of the business’ finances prepared by a third party.
4. Oversight required. Certified government contractors bid on Federal government projects. The government is frequently accused of wasteful spending. One of the preventative steps they take is auditing the contractors providing goods and services. You need your own accountants to interact with their auditors.
5. Non-profits. Charities rely on the goodwill of the public. Universities also raise funds from donors who are proud of their school. If the organization gets itself into dire financial straits, people want to know how the money was spent. Some non-profits might receive government grants to carry out their mission. Charities might not pay taxes, but they need to file paperwork with the Federal and state governments. The staff and boards are held accountable. They need a professional accounting firm.
6. Public companies. Many businesses have shareholders. They might not be listed on the NYSE, but there’s a market for their shares. They are required to produce annual reports and other filings advising shareholders and the government about the firm’s health. This is not a job for amateurs.
7. Income in Cash. Nothing attracts the government’s attention like a business that primarily deals in cash. Bars and restaurants are easy examples, but other B2B and business to consumer services fit into this category. If the government takes an interest, you need to provide abundant documentation. How many times have you heard: “Follow the money?”
8. You do business overseas. The government is concerned about money laundering. It’s illegal to give bribes to obtain business. The government bans American companies from doing business with companies domiciled in certain countries. The United States embargo against Cuba started in 1962 and was in place until the US reestablished relations with Cuba in 2014. Sanctions against other countries make the news almost daily.
9. You or your business has a high profile. In the court of public opinion you are guilty until proven innocent. The IRS operates under the same principle. You need to be able to prove you kept adequate records and filed on time. You don’t even need to be the target. If your biggest client gets caught up in a scandal, your business could be put under scrutiny.
10. Previously audited by the IRS. You are now on the radar. Be careful, because you are being watched.