When many businesses start out, they have no idea that 80 percent fail in as little as 18 months. Sadly, financial management issues are one of the top causes.
Often these business owners don’t know what they don’t know. Because of it, they plan to do it alone. An astounding 27 percent manage their books on scraps of paper and they’re rarely up-to-date, putting them on the road to ruin.
John Savignano, CEO of Savignano accountants & advisors, recently sat down to discuss this disconnect and why businesses of all sizes need accountants.
1. Getting ALL the Deductions
When tax-time rolls around, many business owners are racking their brains to come up with deductions to lower their tax bills. But that’s not how this is supposed to work. More times than not, it doesn’t work in the taxpayer’s favor.
A business either qualifies for a deduction or it doesn’t. Accountants know what a business is entitled to and what documentation they need to keep demonstrating the legitimacy of each deduction.
If owners wait until tax season, often that documentation is unavailable or buried too far down in a shoebox to be accessible. They end up paying more taxes than they owe.
An accountant is a year-round partner that informs business owners of potential deductions throughout the year so they can claim more of them.
2. Avoiding Audits
When compared to the typical situation described above, it’s easy to see how mistakes happen without an accountant. An account makes sure financial documents are accurate and up to date all year-round. It’s always better to avoid audits in the first place, and the guidance of an accountant can help a business do that.
3. Saving Time, Money, and Mental Health Days
An accountant is much more than someone who “keeps the books” up to date.
It’s no wonder the demand for accountants is growing. The Bureau of Labor Statistics (BLS) forecasts a 7 percent increase between 2020 and 2030.
Accounts can identify issues and put various pieces of information together to develop viable solutions for the business leader to consider. Through data, they can forecast needs and shifting trends. They can help companies identify and assess risks to develop a plan to mitigate them.
Accountants are experts at spotting areas where a company could increase revenues, cut costs, and maximize profits.
Often, entrepreneurs don’t hire an accountant because they think they can’t afford one. Sadly, this is limited thinking that hinders the profits the business could otherwise achieve with the guidance of an accountant.
Speaking about his relationship with clients and how he helps them spot and solve problems, According to John Savignano, CEO of Savignano accountants & advisors, “when I meet people… the first thing they say is you’re different from everyone else in terms of accounting. They get that vibration pretty fast, and they see that I’m very well rounded and whatever they throw at me doesn’t seem to irk me or get me surprised and we just deal with it.”
4. Real-Time Decision-Making
It’s an accountant’s job to understand the business they’re working for so they can collect data and analyze financial reports to support data-driven decision-making. This takes attention to detail and suburb communication.
When an owner is considering whether to buy new equipment or fix what they have, they need up-to-date information to make the best decision now. They don’t have time to try to get their books in order if they’ve gotten behind. That lack of real-time data can hurt them financially, especially if this happens a lot.
If a business owner chooses, they can treat an accountant like a “bookkeeper”, someone who just keeps track of the numbers. But to get the most out of the relationship, they should work collaboratively in decision-making, seeking the accountant’s advice as the one most familiar with what those numbers mean for the business.
Discussing his role as an advisor to large and small businesses trying to make real-time decisions, John Savignano said, “I can switch gears to handle the small company issues and I can switch gears to handle the larger type of issues.”
5. Planning for the Future
Whether a company needs to look ahead to next season or 10 years from now, the accountant can analyze the numbers and anticipate what the future holds.
This helps businesses:
- Time large expenses
- Understand how much inventory to carry
- Know when to hire
- Anticipate end-of-life cycles for equipment
An accountant can’t see the future exactly. But all of this leads to fewer unexpected bumps in the road because they can fairly accurately look at the numbers to see what’s coming. They can see the big picture.
All the while, the business owner can stay focused on streamlining operations, building customer relationships, motivating employees, and engaging in other tasks that help a business succeed.
But it’s important to know this extends beyond any one business. The driving force behind any business is the entrepreneur, and sometimes that entrepreneur realizes it’s time to move on to the next big thing or take the existing business in a new direction. An accountant can be instrumental here as well.
John Savignano shared his philosophy on the topic, “If you want to do what you’re doing and you’re happy with that, then you’re fine. But humans are not happy, so they need to move. They need to refocus. And I usually help people with that. They can lean on me, and I can guide them and say, listen, what you’re doing isn’t that unusual or unique, you just got to make the jump and you’ll be fine.”
Working with an Accountant
Working with an accountant is a practical decision but also an emotional one. It can help businesses find their way and succeed in competitive markets with real-time data.
At the same time, it delivers peace of mind that they’re not paying more taxes than they owe or setting themselves up for an IRS audit. Treating an accountant as a partner and trusted advisor helps businesses make more data-driven decisions to maximize their profits and grow their company.