6 Business Conversations You Should Have with Your Accountant (Not Only at Tax Time)

August 26, 2014


Do you think of your accountant as just someone who you send your receipts and reports to at tax time? Do you limit your contact with your accountant to a few tiresome weeks in the spring? And then wait a year to speak to them again?

If this sounds like you, you’re missing out on a big part of what your accountant can offer you and your small business.

Your accountant is already helping you document the past via your yearly tax return. Did you know your accountant can also help you plan the future?

Accountants have the training and expertise to help you set goals and get the most out of your business. They can help you put together a solid plan for where you want your business to be next week, next year, or 20 years from now. All you have to do is share some key information.

Unfortunately, most accountants aren’t psychic, and there isn’t a set of general advice that will fit every business owner. The advice your accountant gives a solo entrepreneur working from home isn’t the same as they’d give a 30 person team looking to be acquired. The more information you can share with your accountant about your goals, both short and long term, the better equipped they are to provide valuable advice for building the business of your dreams.

Here is a checklist of topics to discuss with your accountant to help you achieve your goals all year ’round.

The End Goal for Your Business

Before setting out on a trip, it helps to know the destination. The same is true for your business. What is the ultimate goal for your business? Do you want to build it up so that a bigger company will acquire you? Do you want to run it for the rest of your life, and then pass it on to your kids? Building a business to get acquired is very different than building a family legacy.

Each scenario requires a different approach. Whereas building a family business might favour slow, steady growth, the opposite is true if your goal is to sell. Let’s say you’re building a software company you hope Google or Apple would be interested in buying. In this case, your goal is very rapid growth with less attention paid to profitability. Your accountant can use this information to help you set financial goals along the way. In this case, they might want to make sure you’re adding a large number of new customers every year, but putting less stress on profit and loss.

How Much Growth You Desire

This goes beyond “make me rich as quickly as possible.” Do you want to stay solo or have a large staff?  Do you want a home office or multiple locations across the globe?

It’s not always a given that people want to grow their business into an international chain with hundreds of locations. Working from home means less overhead, especially when running solo. That means you can charge less in the beginning, or simply balance fewer clients than if you had to pay for an office and a small staff. Your accountant can help make sure you’re spending your money on the right parts of your business in order to grow at the pace that matches your goals.

How Soon You Need to be Profitable

I know what you’re thinking, but “immediately” isn’t always realistic. If you’re running the kind of business that takes time to build, it may take a few years before you’ve got the client base needed to start turning a profit. This is also a question people will ask you if you need to borrow money to get started.

Let’s say you have a spouse and kids and you’re starting up a new business after a layoff. You’ve got a mortgage to pay and for the next few years, you will be the only wage earner in the family. You need the business to run a profit yesterday. Your accountant will make sure you focus on keeping costs low, quickly building up a solid customer base, and improving cash flow by limiting how long customers take to pay you. You won’t be able to put a lot of money into the business in the beginning, so starting a business that requires a lot of upfront money for equipment or staff might not be ideal.

How Much Money You’ll Bring Home

Paying yourself 100% of the profits your business generates isn’t always a good idea. If you’re just getting started, sometimes taking a smaller salary now means a much bigger business down the road. The money you don’t spend on yourself can be spent on new equipment, advertising, or additional staff. Figure out how much you need to survive, and your accountant can work with you to find the right balance.

If we look at the last example of that new business owner who needs profits right away, they can’t afford to put a lot back into the business until it’s making enough to cover the family’s expenses. Once that happens though, it’s a good idea to sit down with your accountant to make a plan. This might also be a good time to look at switching from a sole proprietorship and incorporating the business. Depending on your long-term goals, it could also be a good time to hire staff and take a smaller role in the day to day operations. Your accountant can help you make the best choices at each stage.

The Role You’ll Have in Your Business

Do you want to be the CEO, receptionist and caretaker forever? Do you want to eventually take a smaller role in the company as you get closer to retirement? Maybe you just want to get it up and running and then stay away from daily operations as quickly as possible.

Every business is different. We all know the restaurant that has been run by the same family for decades. The mom and dad have been there for 30 years and will probably be there 30 more. They love working in the business every day. Other businesses are less owner-centric. Many entrepreneurs will open a string of businesses and only drop in from time to time to make sure things are running smoothly.

You should discuss the role you want in your business with your accountant whenever you meet. If you’re getting close to retirement age, you’ll need to discuss changes to the business. You might want to work less hours each week but still be able to earn the same amount of money. With the increased cost of hiring people to replace you, your accountant can help you come up with a plan to offset those new costs.

The Role Your Family will Play

There are so many factors to consider when creating a “family business.” There are certainly tax incentives to bring on family members, providing they’re really working in the business. Having your entire family’s income reliant on one source of revenue will also determine how you plan for growth, so discuss these options with your accountant.

Upsides of Partnering with a Key Professional

The most important thing to realize about being a small business owner is that going out on your own doesn’t mean being on your own. Even if you never hire an employee, that doesn’t mean you won’t be working with people along the way. You owe it to yourself and the success of your business to partner up with key professionals. One of the most important of these is a good accountant. If you share your goals and dreams for your business with them, they will provide you with the advice and plans you need to reach those goals.

Related: All You Need to Know About Taxes in 2017


about the author

FreshBooks is the #1 accounting software in the cloud designed to make billing painless for small businesses and their teams. Today, over 10 million small businesses use FreshBooks to effortlessly send professional looking invoices, organize expenses and track their billable time.