What Is an Accountant and What Do They Do?

So, your small business is growing. You’ve been keeping up with the bank account and invoices so far, but now you’re expanding, and sales are picking up. Good news, right? Of course!

But growth comes with even more responsibilities on the not-so-fun side of your business. You know what we’re talking about—that always-growing pile of receipts, bills and pay stubs. Add in accounts receivable and taxes (ugh), and it's easy to feel like you’re drowning. Maybe it’s time to call for help.

Maybe it’s time to call an accountant.

An accountant is a professional who handles bookkeeping and sorts out the financial documents you need to run your business—like profit and loss statements, balance sheets, and more. They audit your books, prepare reports for tax purposes, and simplify all the financial mumbo jumbo that comes with running a business.

In other words, accountants are the financial superheroes you need. Hiring an accountant for your small business is one of the best ways to make sure your books are right from the start.

What Skills Do Good Accountants Have?

Before we jump into what an accountant can do for your business, let’s talk about their superpowers . . . err, skills. Here are a few key skills you’ll find in most accounting job descriptions.

Mathematics and Financial Analytics (Aka Number Crunching)

Okay. Not everyone’s favorite subject. And we’re not saying accountants need to be passionate about math—but they should be good at it. Accountants work with important financial data every day, so a strong foundation in math and analytics is a must.

Computer Savviness

The days of pen-and-paper bookkeeping are long gone. Today’s accountants work with fancy number-crunching software. So, yeah, they should know their way around a computer—and be willing to learn new technology.

Business Knowledge

Good accountants do more than crunch numbers. They look at those numbers the way a business owner (like you) would. That means they can use what they see to help with the strategy side of your business.

Communication

Just like in any professional relationship, communication is key. An accountant needs to be able to break down complex financial info so owners and staff can understand and use it.

Attention to Detail

Shout this from the rooftops! Accountants need to pay strict attention to detail when it comes to working with your finances—right down to the cent. Teeny, tiny errors can cause big problems.

What Does an Accountant Do for Your Business?

Okay, now we know the skills a good accountant brings to the table. But what does accounting mean for you and your business? But how can an accountant’s way with numbers and superhuman calculating skills make your life easier? Here are just a few examples of how an accountant can help your business grow. An accountant can:

• Advise on business structure: Is your small business set up as a sole proprietorship or an LLC? What’s the difference, and what are the benefits of one over the other? An accountant can point your ship in the right direction and even handle the paperwork to get you there.
   
• Help create business processes: All businesses need to have certain ways of doing things to keep the ship sailing smoothly. Without these processes, you can’t be sure things like shipping, receiving and billing are done right. An accountant can work with you to make sure everything is working how it’s supposed to.
   
• Issue invoices: Your business has to make money (duh), so you need to be sure you’re charging—and collecting from—your customers on time and like a pro. An accountant can create and send bills to your customers so you can get paid.
   
• Track invoices: You know invoices were sent, but have they been paid? It’s easy to lose track—especially when your business grows and you gain more customers. Your accountant can track who’s paid (and who hasn’t) so you know how much cash you have on hand and if you need to send late notices.
   
• Keep a record of sales: For your business to succeed, you need to know what you’re selling, how much you’re selling, and how much you’re making. An accountant can keep track of your small business’s sales and run regular reports so you can stay on top of what’s going on in your business. That way you know what your biggest sellers are, which products to phase out, and how much inventory you need for next month.
   
• Manage and pay invoices from suppliers: The bigger your business becomes, the more stuff you’ll need to make it run. Your accountant will pay your suppliers and keep track of those expenses for taxes—that way you know how profitable your business really is.
   
• Handle payroll: How many hours did your assistant work last month? How much were they paid? An accountant can calculate your team members’ pay, tell you how much to withhold for quarterly payroll taxes, and make sure all the paperwork is done right.
   
• Prepare your tax return: It’s hard to say the word taxes without groaning, isn’t it? Especially for a small business. But your taxes have to be done, and (more importantly) they have to be done right. An accountant can work with you to prepare your tax return—they’ll make sure it’s accurate and on time.
   
• Keep you up to date with tax law: Speaking of taxes—isn't tax law confusing? The 2018 tax reform bill changed everything—you’re probably still catching up! An accountant can help you navigate tricky tax laws, make sure your business is compliant with current tax law, and keep Uncle Sam off your back. Some types of accountants can also represent your business if you’re ever audited by the IRS.
   
• Create timely financial reports: How healthy is your business? How much cash should you keep on hand?An accountant will create all the reports you need to make the right financial decisions for your business.

What Are the Types of Accountants?

Accountant responsibilities come in all shapes and sizes, but here are a few types of accountants and the differences between them.

Bookkeeper

Not all bookkeepers are accountants, but all accountants can be bookkeepers. Bookkeepers handle a bunch of stuff for your business, from bill payments to weekly reports. While they’re experts at handling plenty of financial responsibilities, they’re not required to have the licenses that allow them to represent you to the IRS or to prepare your taxes.

Certified Public Accountant (CPA)

CPAs have to pass an exam (and meet a few other requirements) before they can get their license through the state. Once they’re officially a CPA, they’re allowed to prepare and sign tax returns for individuals and businesses and can represent taxpayers before the IRS for audits.

Certified Management Accountant (CMA)

CMAs can work with public companies, private businesses and government sectors. A lot of the time, they’re in leadership roles where they use financial data to help with business strategy, risk management and budgeting. CMAs can also manage a team of accountants who perform basic accounting duties.

Private Accountant

A private accountant typically works with a single company. They’re hired as a team member and paid a salary to perform basic accounting duties and prepare reports for a CPA to review.

Enrolled Agent (EA)

Enrolled Agents have to pass an in-depth exam that covers all sorts of individual and business tax laws. They also have to take 72 hours of continuing education classes every three years to keep their license. Think of EAs as the top dogs of the accounting world. They have unlimited practice rights and can represent your business during IRS tax audits.¹

Forensic Accountant

A forensic accountant specializes in sifting through financial data to investigate legal matters, like fraud (yikes!). They can work with the government, large accounting firms and private businesses to identify and prevent fraud.

What Are the Current Accounting Trends?

Trends? What is this, Twitter? Nope. It’s just good business. And all successful businesses—yes, even small businesses—need to keep up with today’s trends to stay competitive. The same goes for your accountant. Here are three areas to keep an eye on:

Data Security

Accountants have access to very sensitive financial information. Because of this, people in this field are always improving their digital privacy and security measures to make sure your info doesn’t end up somewhere it shouldn’t. Your accountant should be up to date on the latest security practices to keep your business safe and secure.

Automation

No, we’re not talking about your own personal robo-accountant. We’re talking about software that takes those boring, time-consuming tasks (like data entry) and does them for you. Automation cuts down on the number of mistakes and frees up your accountant for other high-level jobs. This can save you time and money. Nice!

Forecasting

Today’s accountants are way more than number crunchers—think of them as financial weather people. They use their data analysis skills to keep a sharp eye on your finances and track patterns that can help them (and you) predict future opportunities—keeping you ahead of the curve.

When Should You Hire an Accountant?

It’s smart to have expert advice from an accountant throughout the life of your small business, whether you’re just in the planning stages or you already have team members. But advice from a professional can only be helpful if you’re willing to take it.

Got small business tax questions? RamseyTrusted tax pros are an extension of your business.

Small-business owners wear lots of hats and can struggle with giving up some of that control to others. Or maybe you’ve had a bad experience with someone keeping your books in the past and don’t want to go through that again. After all, this business is your baby. You built it from scratch. This is why you need a trusted, experienced and qualified professional.  

Get the Accounting Help You Need

All this seems like a lot of work . . . and it is! Small-business owners spend countless hours keeping up with their books and taxes. That’s a lot of time that could be better spent on your business, developing new ideas and doing what you love.

Bringing on an accountant isn’t just about the value of your time. It’s also about running your business the best you can—and that might include bringing in an expert to help you with the financial side of things. But we understand it’s difficult to find someone you trust who has the skills to get the job done. So, we did it for you.

RamseyTrusted pros have been vetted and have our seal of approval. We know they’ll serve you with excellence, so let us put you in touch with one of our trusted Endorsed Local Providers (ELPs).

Find a top-notch accounting pro near you today!