As you grow your business you will need advisor for your money management. The question here is, should you hire an accountant or a financial consultant here?
It’s very important to understand that accounts and finance both are forms of money management. While finance deals with your investments, mutual funds, stock investments etc, accounts deals with your taxes, receivables, payables, profitability etc.
Here are differences between accounts and finance and circumstances where you will hire accountant over a financial consultant.
Hiring a financial consultant
A financial consultant or advisor or planner is a person who advises for managing your personal and business finances. Here are few reasons why you should hire a financial consultant.
When you want to manage your assets
An owner of a small business is busy with his day to day operations and has very little time to conduct investment research. A financial consultant can help these businesses to draw a comprehensive strategy based on risk tolerance, investment horizon and objectives. They will help you to select best investment option from equity, mutual fund, ETFs and more to ensure that you have a balanced portfolio of investments.
When you need insurance planning
Insurance advisory is a critical aspect of financial planning. An insurance planner may guide you on what kind of insurance you need based on your age, future events, degree of risk in your business etc. Different types of insurances may be life insurance, key man insurance, health insurance, property insurance, fire insurance etc.
When you need employee benefits plan
Offering benefits to employees by way of their financial planning can be a great way of attracting and retaining employees. A financial consultant may provide consultation on retirement benefits to employees along with consulting them on investment in mutual funds, ETFs, equity, insurance etc.
When you want to create exit strategy
While working on exit strategy you need to think what do you want to do with your business, you want to keep it or sell it?
If the answer is sell it, you have to work on the toughest valuation part. Here you need to sit with your financial consultant to work on your investment strategy after selling your business, tax implications etc.
Hiring an Accountant
There are some scenarios when you need to hire an Accountant to handle your business accounting needs. Here are a few events when you may hire an accountant:
When you are starting new business
You need advice from an Accountant when you are starting a new business as you need to understand advantages and disadvantages of different types of entities. For example, you may start a sole proprietorship where you are the only decision maker; you are taxed as an individual and enjoy various tax exemptions. At the same you have risk of unlimited liability, and sometimes banks also do prefer not to lend money to proprietorships.
Another type of business is Partnership, where two or more than two persons can come together and form a partnership firm. The liability of partners here is again unlimited and all partners are liable for misconduct of other partner.
When you are starting a new business, your obvious choice of type of entity might not be the best choice. An accountant can advise you on the most appropriate type of business entity which provides you the most flexibility and protection.
When you want to write business plan
Writing a business plan is thinking of a roadmap which helps you to stay focused on where you want to go. A good business plan is the one which helps you to identify your niche market and offerings.
An accountant can help you to prepare your business plan with realistic estimates and accurate calculations. A business plan may be helpful in raising funds from banks or investors.
How much does an Outsourced accounting firm cost
There is a misconception that outsourced accounting is costlier. In fact, when you hire an in house accountant, you have to pay salary and provide other benefits to the employee. There are always incidental costs involved in case of a full time employee.
More and more businesses now a day are choosing outsourced accounting. Hiring Ofin can reduce your costs by nearly 40%. We also provide a fixed price contract where you do not have to worry about how many people are working on your assignment and what extra efforts are required to complete your work. Further, we have specialized manpower for different types of compliances and above them all a Chartered Accountant and Company Secretary for overall compliance check. A small business cannot afford this kind of setup and end up paying heavy price for non compliance. Contact us today to see how we can help you for your accounting needs.