Why Hire an Accountant When Starting a Business?

Entrepreneurs looking to hire an accountant for small businesses are making one of the most important decisions for their business. Accountants are essential for relevant and accurate information to base decisions on. They must be knowledgeable, communicative, and timely. Many entrepreneurs begin with a search “small business accountant near me” or “accountant for a small business near me,” but locality is much less important than the quality of service. Many of the best accountants or accounting firms operate remotely. This blog will explore the major questions entrepreneurs have regarding hiring an outsourced accounting expert. 

Getting startup accounting right from day one is one of the smartest moves a new founder can make. The IRS’s own Starting a Business guide shows just how many tax and registration decisions land on your desk in the first year alone. Below, we break down the biggest reasons why hiring an accountant when starting a business pays for itself.

Do I Need an Accountant for My Small Business?

All businesses need someone fulfilling the accounting function, but not necessarily an experienced accountant. Many small businesses of less than 5 people have their business owners do their accounting. This works because of the low transaction volume and the overall size of the business. Businesses with higher transaction volumes, more revenue, and more people are more likely to need an outsourced or full-time accountant. 

Should I Hire an Accountant for My Small Business?

Not every small business needs an accountant to handle its financial function. However, most small companies could benefit from greater financial clarity or more time on their hands. Each small business is uniquely positioned to have either an outsourced accounting function or an in-house accountant. We’ve created 5 signs to help indicate when you need either a full-time or outsourced accounting resource. 

Choose the Right Business Structure (LLC vs. S-Corp vs. C-Corp)

The entity you choose affects your taxes, your paperwork, and your personal liability for years to come. An accountant can model how an LLC, S-Corp, or C-Corp would each play out for your specific revenue, ownership, and growth plans, so you don’t get locked into the wrong structure. The SBA’s guide to choosing a business structure is a useful starting point, but a professional can tailor the decision to your actual numbers.

Set Up Taxes, EIN & Registrations Correctly from Day One

Every new business needs an EIN, the right federal and state tax accounts, and a reliable system for tracking deductible expenses. An accountant makes sure these are registered correctly so you’re not scrambling — or paying penalties — when your first filing comes due. Pairing formation with proper startup tax preparation (/tax-accounting-services) means fewer surprises and a much cleaner first tax season.

Avoid Costly Mistakes and IRS Penalties

Misclassified expenses, missed estimated payments, and sloppy records are some of the most common — and most expensive — early mistakes founders make. The IRS charges interest and penalties for late or inaccurate filings, and those costs add up quickly for a young business with thin margins. An accountant builds the guardrails that keep you compliant and out of trouble before small errors become big ones.

Save Time to Focus on Growing Your Business

Every hour you spend reconciling accounts is an hour you’re not spending on customers, product, or sales. Handing bookkeeping and routine finance work to a professional frees you to do what only you can do as the founder. Many small businesses start with outsourced bookkeeping and add payroll services as the team grows, keeping overhead low while staying organized.

Improve Cash Flow Forecasting and Runway

For a startup, cash is survival, and knowing how many months of runway you have left is non-negotiable. An accountant can build forecasts that show exactly when cash gets tight and how hiring, pricing, or spending decisions change that timeline. With fractional CFO services, even an early-stage company can get this level of financial visibility without paying for a full-time hire.

Get Investor- and Funding-Ready Financials

Investors and lenders expect clean, credible financial statements before they’ll write a check. An accountant prepares books that stand up to due diligence and can present your numbers the way funders want to see them. If you want proof it works, see our client results from businesses that have raised capital with the right financial support behind them.

Stay Compliant with Filing Deadlines

Federal, state, and local deadlines pile up fast — income tax, sales tax, payroll filings, annual reports, and more. Miss one and you risk penalties or even losing your good standing as a business. An accountant tracks every deadline and follows the professional standards set by bodies like the AICPA, so nothing slips through the cracks.

5 Signs Your Small Business Needs an Outsourced Accountant

In the hustle and bustle of running a small business, it’s easy to get caught up in daily operations and overlook certain aspects that could be crucial for growth. One such area is accounting. Here are five clear signs that it might be time to consider outsourcing your accounting tasks to an expert:

You Are Not Proactively Making Decisions Based on Your Financials
It’s not just about having a record of your finances; it’s about using them to inform and guide your business strategy. If your business decisions are more reactive than proactive, or if you need to regularly consult your financial reports before making significant decisions, it might be a sign that you need an accountant to provide clarity and insights from your financial data.

Your Revenue is Growing, but Your Profits are Not
If you’re noticing a consistent increase in revenue but stagnation or decline in profit, there may be underlying issues that you need to include. An outsourced accountant can help scrutinize your income and expenses, pinpointing inefficiency, excess costs, or opportunities for better financial management.

You’re Spending More Than 8 Hours a Month on Accounting
Time is money. Suppose you’re dedicating a significant amount of time to managing your books instead of growing your business, strategizing, or focusing on core operations. In that case, you’re not focusing on what’s most important. An outsourced accountant can streamline and manage these processes, freeing up your time to focus on what you do best.

You Need Financial Forecasting
As your business grows, it becomes crucial to clearly understand where you’re headed financially. This includes predicting future costs, revenues, and potential challenges. An accountant can provide these insights, helping you to budget, plan for future growth, and anticipate potential financial obstacles.

You Want Expertise in Your Financial Function
The financial realm is vast, and it’s challenging for one person to be an expert in all aspects. Whether it’s tax codes, industry-specific regulations, or leveraging financial tools and software, an outsourced accountant brings expertise. They can ensure you’re compliant and taking advantage of any economic benefits or opportunities available to your business.

5 Signs Your Business Needs a Full-Time Accountant

1. Your transaction volume is between 500-750 or more each month
2. Your current accounting structure is overloaded or too expensive
3. Your business is growing rapidly
4. You have a lot of outstanding invoices
5. You are ready to build out a finance team

Is It Important to Have an Accountant for a Small Business?

Yes, it is important to have an employee fill the accountant role. This could be a full-time accountant or someone who is trained in accounting doing it as one of their functions. It all depends on how laborious the accountant’s role is. A professional accountant can help with:

• Monitoring a company’s financial records and financial reports
• Managing accounting software
• Preparing financial statements
• Understanding tax obligations and tax laws
• Assisting with business growth and updating the business plan

How an Accountant Helps Before, During, and After Launch

The reason an accountant is important to small businesses is because they help show the past, present, and future financial state of your business. 

Past

Accountants are in charge of recording and correcting historical financial data. This practice helps businesses understand their growth, costs, best and worst products, and more. Historical data is often the driving force behind future decision-making and forecasts. 

Present

The value of accurate and timely financial practices is the ability to understand the current state of the business. Accountants’ work results in understanding cash, revenue, expenses, inventory, and more in real time. This information leads to better decision-making. 

Future

Higher-level accounting allows you to make educated forecasts of the future financial state of your company. For example, a financial forecast can indicate the cash flow impact of hiring one vs. two new employees. Financial models can also predict revenue and expense growth. 

When Should a Startup Hire an Accountant?

The best time to bring in an accountant is at formation, when structure and tax-setup decisions have the biggest long-term impact. At the latest, you’ll want one in place before you raise outside funding or make your first hire, since both add real financial complexity. Many founders begin with a fractional or outsourced arrangement and scale up as revenue and transaction volume grow.

How Much Does It Cost to Hire an Accountant for a Small Business?

If reading this blog made you realize “I need an accountant for my small business,” then it’s important to know the costs. Indeed reports the average salary of an accountant is $61,871. This does not include benefits. Outsourced accountants do not get paid benefits. They are paid on an hourly or fixed monthly fee basis. Hourly outsourced accountants can range from $40/hr-$90/hr for bookkeeping, $100/hr-$175/hr for controllership, and $175/hr-$400/hr for CFO services. Fixed fees are usually a combination of controllership and remote bookkeeping services, with an average package of around $1,250/month, but these can vastly vary depending on the level of service. 

DIY vs. Bookkeeper vs. Accountant: Which Do You Need?

Not every startup needs the same level of financial support on day one. This quick comparison shows what each option does, who it fits best, and where the risks lie.

Option	What They Do	Best For	Typical Cost	Risk
DIY / software	You record your own books	Pre-revenue, very simple	Software fee (~$15–$35/mo)	Costly mistakes as you scale
Bookkeeper	Records transactions, reconciles	Steady operations	Hourly or ~$300–$600/mo	Limited tax/strategy help
Accountant / outsourced	Plans, advises, files taxes	Growth, funding, compliance	Fixed monthly or hourly	Lowest—full expertise

How Milestone Can Help Small Business Owners Improve Cash Flow and Accounting

Milestone’s fractional accounting services are built to help small businesses fulfill their accounting needs. We offer bookkeeping, controllership, and CFO-level accounting services to small businesses at a fractional price tag. We work with hundreds of small businesses, so we bring our experience into our processes to help optimize your business’s financial function. Reach out today to learn more about how we can help your small business. 

Ready to get your startup accounting off on the right foot? Book a free consultation (/contact-us) with our team today.

Frequently Asked Questions

Do I need an accountant or can I DIY at first?

DIY works very early, but risk and time cost rise fast as you scale.

Bookkeeper vs. accountant—which do I need?

A bookkeeper records transactions; an accountant plans, advises, and files taxes.

When should a startup hire an accountant?

Ideally at formation, and definitely before raising funds or hiring.

How much does an accountant cost for a startup?

From hourly or fixed outsourced fees to a full-time salary—see the cost tables above.

Is hiring an accountant worth it?

Usually—tax savings and avoided penalties typically exceed the cost.