Do You Even Need an Accountant If You Use QuickBooks?

There was a time when keeping the books meant paper ledgers, sharp pencils, and a lot of record-keeping.  It was a laborious task. 

With software like QuickBooks, the bookkeeping part of running a business is more accessible and much of it is automated.

For example, all of the double-entry and entering expenses that used to take hours now take minutes. 

So, if you are using QuickBooks, do you even need an accountant? 

In reality, while bookkeeping used to take up a lot of time, it has always been a small part of accounting.  Bookkeeping was the work that allowed accountants to do the thinking work of helping companies grow and prosper. 

You don’t always need an accountant, but if you run a business, you should certainly look into it.  Even if you don’t think you need an accountant, 89% of small businesses surveyed by Intuit say they are more successful with an accountant by their side and giving advice.

Yes, I am biased, but I see how we help our clients manage their business, find peace of mind and save money.  In the simplest of terms, these seem like the best reasons to hire an accountant. 

In this post, I talk about what bookkeeping is and then go through the services you should expect from your accountant.  I then give you some idea as to when you may NOT need an accountant. 

Financial management starts with bookkeeping

Bookkeeping is the process of “keeping the books.” The books are the records of business transactions, income, and expenses.  They used to be actual books with handwritten entries; these days, the book is a database. 

Keeping the books is an integral part of running a business.   No matter how small your business is, you want some record of income and expenses.  This is important for paying taxes, knowing how much money you have available, raising capital, getting loans, and just knowing what you are spending your money on. 

Many entrepreneurs and freelancers rely on bank statements, 1099’s, and guesstimates to estimate their financial situation, but this creates many problems, from overdrawn accounts to costly IRS audits. 

Software like QuickBooks is excellent at making the bookkeeping process easier.  You can easily download and categorize transactions so that you are always on top of your financial situation.

Accountants take it from there

Accountants start with the books.  Most accounting firms (including Rosenberg Chesnov) will do the books for you.  Accountants manage QuickBooks so that you don’t have to. 

But the books provide only the basic information that accountants need to help you run your business.  Your accountant should provide strategic advice and support that enables you to run your business. 

A good accountant will: 

  • Set up and manage your bookkeeping software.  As easy as bookkeeping software is, you want to ensure that it is set up correctly for your business.  The correct chart of accounts matters, and your accountant will be much faster at categorizing and optimizing your transactions.
  • Create information out of the bookkeeping data.  Bookkeeping is the starting point, but an accountant will turn the data of your books into information that you can use to run your business.  This includes financial statements, cash flow analyses, profit and loss statements, and other helpful information that builds on the data that comes from bookkeeping.
  • Advise you on your business entity/structure.  Many businesses define their structure by default.  They start as sole proprietorships with intermingled finances, which can lead to tax and liability issues.  You may want to consider a limited liability structure or a corporate structure, both of which offer certain advantages and disadvantages. The choice depends on what you envision for your business and your accountant can help you assess the trade-offs.
  • Help you make critical business decisions.  Managing a business involves navigating a continuous stream of tradeoffs.  You can’t do everything at once, so where should you focus your time and money?  Your accountant can help you ensure you are making profitable decisions that support your long-term vision.
  • Manage expenses and save you money.  Since accountants see many different businesses working in many different ways, they can often tell you where you are overspending compared to others. They can also help you find lower-priced vendors or avoid fees that you may not be paying attention to.
  • Design your strategy and business plan.  Entrepreneurs are typically great at what they do but are not always great at managing a business. Your accountant is a valuable sounding board to help you build your plan.
  • Help you identify and obtain all of the appropriate licenses.  There are several licenses and registrations that your business needs to operate legally.  These include sales tax permits, business licenses, employment accounts, unemployment insurance, and trade-specific permits. In addition, each state and even city jurisdiction can have a very different set of regulations.  Your accountant has been through this before and can help you cut through the red tape.
  • Help you raise money and engage with your investors.  If you are considering raising money to fund your business, having an accountant on your side is vital.  A good accountant will help you prepare for due diligence and all other aspects of the fund-raising process.  They will help you present the best case for investment, structure the business so that it is ready to receive investment, and help you manage the money once you receive it.  
  • Manage your compliance needs.  The process of running a business requires complying with a long list of regulations. 

These include:

  • Income tax – you will have to file your income tax once a year and make estimated tax payments throughout the year. 
  • Sales tax – complying with sales tax in the US is a nightmare; there is really no other way to say it.  There are local and state regulations to deal with, and if you are shipping anything anywhere, you will have multiple jurisdictions to manage. 
  • Payroll – managing the ins and outs of payroll is complex.  There are local taxes, state taxes, federal taxes, and several different filings to manage.  An accountant can keep you compliant, help manage the process and even help you decide if you should outsource to a professional employment organization. 
  • Other regulatory filings – depending on what you do and where you are, there are any number of regulatory filings you must comply with, including filings that keep your business entity in good standing and protect you from liability.

When you need an accountant:

The list above is a long list of “things an accountant can do for you.”  So, the question is, when do you need those things?  You should consider hiring an accountant when you:

  • Manage a growing business.
  • Have complex transactions.
  • Manage across geographies.
  • Hire people.
  • Need advice on how to invest and plan for the future.

So, when don’t you need an accountant?

As I said in the introduction, 89% of small businesses state they are more successful due to working with an accountant.  That is a significant number and something worth considering when making your decision – regardless of your situation. 

But there are some cases where you may be able to get by without an accountant:

Your business is a hobby.  If your business is truly a hobby that brings in a small amount of money on the side, you likely do not need the services of an accountant. Use your bookkeeping software to keep track of expenses and income (don’t wing that part), but very small businesses that are not on a growth track can stick with the default settings and operate without strategic advice.

You are a freelancer.  If you are a freelancer with only a few clients, then you may be able to manage your financial situation yourself.  You may want to talk to an accountant to ensure you have the correct business entity and perhaps get some setup advice.  But if all you are doing is managing a few simple transactions you may be able to skate by without professional help.

Your situation is generally straightforward, and you know what you are doing.  If your tax situation is simple, your business is in a steady-state, and you know exactly what you need and when then you may be able to wing it without an accountant. 

But the truth is that even in situations where you may be able to “wing it” without an accountant, you should consider carefully the cost of mistakes and the time you put into accounting.  Often your accountant can help you reduce the time, effort, and annoyance of running a business while saving you enough money to pay for themselves.  So even in the simplest of situations, you might want to consider talking to an accountant. 

Though, admittedly, as I said at the beginning, I am biased!

Would you like some help?

If you are a client and would like to book a consultation, call us at +1 (212) 382-3939 or contact us here to set up a time.

If you aren’t a client, why not? We can take care of your accounting, bookkeeping, tax, and CFO needs so that you don’t have to worry about any of them. Interested? Contact us here to set up a no-obligation consultation.

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Jeff Coyle, CPA

Jeff Coyle, CPA, Partner of Rosenberg Chesnov, has been with the firm since 2015. He joined the firm after 20 years of business and accounting experience where he learned the value of accurate reporting, using financial information as a basis for good business decisions and the importance of accounting for management.

He is a diligent financial professional, able to manage the details and turn them into relevant business leading information. He has a strong financial background in construction, technology, consulting services and risk management. He also knows what it takes to create organizations having built teams, grown companies and designed processes for financial analysis and reporting.

His business experience includes:

Creating and preparing financial reporting, budgeting and forecasting.
Planning and preparation of GAAP and other basis financial statements.
Providing insight on financial results and providing advice based on those results.

Jeff also has a long history of helping individuals manage their taxes and plan their finances including:

Income tax planning and strategy.
Filing quarterly and annual taxes.
Audit support.
General financial and planning advice.
Prior to joining the firm in 2015, Jeff was in the private sector where he held senior financial and management positions including Controller and Chief Financial Officer. He has experience across industries, including construction, technology and professional services which gives him a deep understanding of business.

Jeff graduated from Montclair State University, he is a CPA and member of the American Institute of Certified Public Accountants, New York State Society of Certified Public Accountants and New Jersey State Society of Public Accountants.

Jody H. Chesnov, CPA

Jody H. Chesnov, CPA, Managing Partner of Rosenberg Chesnov, has been with the firm since 2004.  After a career of public accounting and general management, Jody knows the value of good financials.  Clarity, decision making, and strategy all start with the facts – Jody has been revealing the facts and turning them into good business results for more than three decades.

He takes a pragmatic approach to accounting, finance and business. His work has supported many companies on their path to growth, including helping them find investors, manage scaling and overcome hurdles.  His experience and passion for business reach beyond accounting and he helps businesses focus on what the numbers mean organizationally, operationally and financially.

He has a particular expertise in early-stage growth companies.  His strengths lie in cutting through the noise to come up with useful, out of the box, solutions that support clients in building their businesses and realizing their larger visions.

Prior to joining the firm in 2004, Jody was in the private sector where he held senior financial and management positions including General Manager, Chief Financial Officer and Controller.  He has experience across industries, which gives him a deep understanding of business.

Jody graduated with a BBA in Accounting from Baruch College, he is a CPA and member of the American Institute of Certified Public Accountants and New York State Society of Certified Public Accountants.

In addition to delivering above and beyond accounting results, Jody is a member of the NYSCPA’s Emerging Tech Entrepreneurial Committee (ETEC), Private Equity and Venture Capital Committee and Family Office Committee.  

He is an angel investor through the Westchester Angels, and has served as an advisor for many startup companies and as a mentor through the Founders Institute.

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