Running a small business is not an easy task. As you start, you learn that you not only need small business accounting services, but also the help of a financial advisors to guide you on how to grow your money and maximize your wealth.
But how to know which one you need to turn to? What are the services accountants and financial advisors offer? To get a grip on your finances, learn the differences between an accountant and a financial advisor so you can choose the right one as per your needs.
What Is the Role of an Accountant?
An accountant is a financial expert with formal education in accounting and tax preparation services. Small businesses are best served by accountants when it comes to accounting.
As part of a business, an accountant undertakes various responsibilities. They prepare account books and tax returns, keep a tab on the cash flows, and prevent fraud through up-to-date bookkeeping.
Business owners can’t handle everything on their own. You need an expert for small business accounting services because no matter how small a business is, accounting, bookkeeping, and tax preparation require a significant amount of time and attention. Accountants are professionals and possess excellent knowledge and experience in the field. Thus, they lessen your burden and save money by helping you avoid costly mistakes in your tax return.
What Is the Role of a Financial Advisor?
Financial Advisors, as the name suggests, do not involve themselves in the daily matters of the business but guide you to achieve your future financial goals. They can be consulted when you need advice on a financial matter. They concern themselves with long-term planning and making strategies for your success.
They help you in tax planning, making investments to claim fruitful deductions, cashflow planning, budgeting for your business, debt planning, etc.
If you have a small business and you are not familiar with finances, you will need a financial advisor to help you with your budget and planning your cashflows. Wealth management is their primary responsibility. Accountants help you with your present, and financial advisors work on your future. If you wish to reduce costs and increase profit, financial advisors are the ones to turn to.
Accountants Vs. Financial Advisors
Both accountants and financial advisors undergo rigorous training to attain knowledge in their areas. Accountants pursue CPA or IRS enrolled agent certification and pass various examinations and training to get the title. Their training helps them become certified professionals to attest and audit your financial statements, which are admissible for taxation purposes.
Financial Advisors complete formal education, including a bachelor’s degree and various certifications, to attain the title of Certified Financial Planners. On-the-go training also helps them gain the required knowledge and expertise.
When Do You Need an Accountant?
Being a business owner, you always need an accountant to keep your books up-to-date and error-free. Hire an accountant for:
- Keeping your accounts.
- Preparing your financial statements.
- Auditing your financial records.
- Preparing your tax returns.
- Dealing with taxation authorities, etc.
When you launch a new business, you need an accountant to manage your books and taxes. Your accountant analyses your costs and profits and thus, can guide you if cost-reduction is your goal.
When Do You Need a Financial Advisor?
As your business starts to grow, you need expert advice to manage your wealth. A financial advisor is an excellent choice for the following tasks:
- Managing your money
- Guiding you on retirement planning
- Guidance on acquisitions and mergers
- Investment Planning
- Seeking new market opportunities, etc.
Financial advisors and accountants need to discuss and find out how much funding you need to expand and the best ways to acquire the funds. Money doesn’t grow by itself, and thus, financial advisors must be consulted for investment planning. Acquiring new business requires identifying the best opportunity and business valuation. Financial advisors undertake this responsibility.
Now that you understand the difference between an accountant and a financial advisor, the first step is to identify your business needs.
Availing the services of an accountant or financial advisor is not a luxury but a necessity for every business. You must hire small business accounting services and share the responsibility, so you can focus on growing your business.