Starting a small business can be one of life’s most rewarding experiences but also one of the most challenging. There are a million things you must consider, from choosing the right business structure to managing your finances and taxes. One of the most vital steps of all is finding the right accountant. An accountant can be your best ally in navigating the complex world of small business, helping you make informed decisions and avoid costly mistakes. In this article, we’ll dive into seven critical questions you should ask your accountant before starting a small business.

1. What Type of Business Structure Should I Choose?

The first decision you’ll need to make when starting a small business is what type of business structure to choose. Your accountant can help you decide which structure is right for your business, whether it’s a sole trader, partnership, company, or trust. Each business structure type has its own advantages and disadvantages, so selecting the structure that best suits your needs is essential. For example, a sole trader is the simplest and most cost-effective structure, while a company provides more protection for your personal assets.

2. What Are My Tax Obligations?

As a small business owner, you’ll be responsible for paying various taxes, including income tax, GST, and payroll tax. Your accountant can help you understand your tax obligations and ensure you meet all your requirements. An experienced accountant can also help you plan for tax payments and advise on reducing your tax liability.

3. How Should I Keep Track of My Finances?

Keeping track of your finances is crucial for your business’s success. Your accountant can help you set up a bookkeeping system and show you how to manage your cash flow effectively. They can also recommend accounting software that can simplify the process. Having a good grasp of your finances helps you make better-informed decisions and avoid financial pitfalls that could jeopardise your business.

4. What Expenses Can I Claim?

As a small business owner, you’ll have various expenses you can claim as deductions on your tax return. Your accountant can help you identify which expenses are deductible and ensure you’re claiming everything you are entitled to. This could include expenses such as office rent, utilities, travel, and equipment purchases, among others.

5. What Records Do I Need to Keep?

Keeping accurate records is crucial for small business owners. Your accountant can advise you on what records you need to keep and for how long. A skilled accountant can also help you set up a record-keeping system that is easy to use and meets all legal requirements. Keeping accurate records helps you stay organised, monitor your cash flow, and prepare for tax time.

6. How Can I Improve My Cash Flow?

Cash flow is incredibly important for small businesses, and effectively managing it can be challenging. Your accountant can provide you with strategies to improve your cash flow, such as offering discounts for early payment or negotiating better payment terms with your suppliers. A skilled accountant can also help you identify areas where you can minimise expenses and increase revenue.

7. What Are the Risks Associated with My Business?

Every business has risks, and it’s crucial to identify and manage them effectively. Your accountant can help you identify the risks associated with your business and provide advice on how to mitigate them. They can also recommend insurance policies to protect your business from potential risks. Understanding the risks associated with your business helps you prepare for the unexpected and safeguard your business’s future.

Final Thoughts

Hiring an accountant is a crucial step in starting a small business. An experienced accountant can provide valuable advice on everything from business structure to tax planning to managing finances. By asking these seven questions, you can ensure your accountant has the expertise and experience to help you succeed. Remember, finding the right accountant for your business can make all the difference in achieving your business goals and creating a successful and sustainable enterprise.

Start your small business on the right foot with the help of Prosperity Accountants. We are accountants in Perth that provide affordable fixed fee accounting, tax and advisory services that help business owners save tax, increase cash flow and improve profits. We give expert advice on accounting and tax regulations and make sure your startup stands out from the competition. Book a consultation now!