Your business needs an accountant. Why? Setting up your bookkeeping system properly is essential. This is not a job for amateurs. The plan to hire an accountant may not make a lot of sense to you in the beginning but it quickly becomes obvious why you need one.
An accountant is knowledgeable about business functions, tax matters, financial statements and invoicing. My accountant also helped me get my company registered as a LLC. He kept an eye on cash flow and let me know when unused portions of retainers were accumulating.
Here’s specifically what an accountant does for your legal nurse consulting business.
1. Your accountant makes a recommendation on what type of bookkeeping software you should use. There are several programs designed for small businesses. You want a system that is easy to use.
2. Your accountant may install and set up the software for you. This involves creating numerical codes for expenses and income.
3. Your accountant may show you how to invoice. In the beginning of your business it does not make sense to hire a person to invoice unless you start having a large volume of invoices. You should know how to do this.
4. Your accountant should show you how to run basic reports, such as profit and loss and overdue invoices.
5. Your accountant should show you how to use reports to spot trends in your business.
6. Your accountant may reconcile your bank statements or show you how to do that.
7. Your accountant should explain what expenses are tax deductible and which are not.
8. If you hire other LNCs as subcontractors, your accountant should explain how to issue 1099 statements which are due in the beginning of the year to anyone you pay more than $600.
9. If you decide to apply for a loan, your accountant may audit your accounts.
10. Your accountant should provide you with help in setting up a system that will make it easy to pull data for doing your income taxes.
Should You Hire a Local or Remote Accountant?
There used to be only one choice – you needed a person who came to you or you went to the accountant’s office. Now it is possible to work with a person in another part of the country or world. Because I split my time between my two houses in two states, I find it very convenient to keep my accounting data on the cloud, which allows my accountant to access it at any time. Check out this link before you invest in a more expensive solution.
There are advantages to having a local accountant, though, particularly for a new LNC. It is useful to have a person sit in the same room with you to explain procedures and to install accounting software on your machine.
And there is another huge advantage to using a local accountant. Many have connections to local attorneys, the kind who can hire you. As your accountant gets to know you and understands your business, it is likely your accountant will think of attorneys who could use your services.
How to Find and Hire an Accountant
The best way to find a good accountant is to get a referral. Talk to a banker, a business attorney, the local Chamber of Commerce, or a small business owner you respect. Look for a Certified Public Accountant; these individuals have an elevated level of skill.
I recommend interviewing 2 or 3 to discuss what you are looking for and to determine the fees involved. You want to work with a person who understands not only finance, but also how to communicate with people. The two do not always go hand in hand.
Ask if the accountant uses a bookkeeper for some of the work. Some financial tasks can be done by a person less skilled than an accountant. Ask for references and speak to these clients to see how satisfied they are.
Once you hire an accountant, closely monitor the accountant’s performance. Is your work getting done? Do you understand the accountant’s explanations? Are your calls returned?
If you are unhappy with the accountant’s performance, switch. A few years ago, I changed accounting firms 3 times in 6 months. It is painful, but necessary.
The more you “know your numbers”, the more in control you will be of your business. You can make intelligent, informed decisions when you hire an accountant.
Get detailed information on how to manage your LNC business in my book, How to Manage Your LNC Business: Top Tips for Success. It is full of practical wisdom you can apply to your business to make more money and deepen the strength of your business. Order it at this link.