Managing your money can be fairly straightforward, but for small business owners, it can become quite complicated. Hiring an accountant, financial planner, or both is a great way to make sure your business’ finances are in order.
But what is the difference between an accountant and a financial planner?
Accountants are often involved in tax preparation and returns. In the past 100 years, the number of pages in the Internal Revenue Service (IRS) tax code has increased 16,775%. With so many complicated codes and situations to remember, it is advisable to hire a tax accountant. Of course, accountants offer so many services beyond just filing tax returns. A qualified accountant can draft financial statements, advise you about depreciation of assets, and give recommendations about business structure.
Accountants may also provide bookkeeping services to make sure everything is accounted for, reducing your chance of an audit. If you are audited by the IRS, an accountant will represent you and help keep you from making any costly mistakes.
Financial planners often work together with an accountant in order to lower the company’s financial risk. By focusing on investments and budgeting, financial planners help companies consolidate debt and manage their cash flow for increased revenue. A financial planner may also manage insurance and estate planning, as well as give specific advice about company structure and wealth accumulation.
Accountants and financial planners both make managing your money easier, and are focused on helping the business succeed financially. While accountants attempt to increase a company’s capital by decreasing tax liability, financial planners view strategic investments as the way to go. By working with an accountant and a financial planner, you get the best of both worlds. Managing your money with the help of an accountant and a financial planner is a great way to build a savings and stay on the IRS’ good side.