What does an accountant do? Duties, taxes, and advice

Published Friday 20 March 2026

Table of contents

• What is an accountant?
• Core accounting duties and responsibilities
• Types of accountants for small businesses
• When your small business needs an accountant
• How accountants support your business strategy
• Managing cash flow and financing
• Setting up accounting technology
• Supporting business growth and operations
• Tax planning and compliance
• How to find the right accountant
• Work with your accountant seamlessly through Xero
• FAQs on working with accountants

Key takeaways

• Recognize when your business needs professional accounting help by watching for key indicators like annual revenue exceeding $100,000, hiring employees, or spending hours each week on financial tasks that take time away from growing your business.
• Choose an accountant who provides strategic guidance beyond basic tax filing, including cash flow management, financial forecasting, and business growth planning to maximize the value of your investment.
• Implement cloud accounting software with your accountant to automate routine tasks like bank reconciliation and invoice tracking while giving both of you real-time access to your financial data for better collaboration.
• Evaluate potential accountants by asking specific questions about their services, technology expertise, and communication style, while watching for red flags like reluctance to explain fees clearly or lack of experience with businesses your size.

What is an accountant?

An accountant is a financial professional who records, analyzes, and reports on your business's financial activities. Accountants help you stay compliant with tax laws, make informed decisions, and plan for growth.

Most accountants hold a degree in accounting or finance. Many earn additional credentials like the Certified Public Accountant (CPA) designation, which requires passing a rigorous exam and meeting experience requirements. The value of these advanced programs is high; for example, in a survey of the AICPA's Finance Leadership Program, 95% of candidates said they would recommend this program to others.

Accountants differ from bookkeepers in scope. Bookkeepers handle day-to-day transaction recording, while accountants interpret that data, prepare financial statements, file taxes, and provide strategic advice.

Core accounting duties and responsibilities

Accountants perform essential financial tasks that keep your business accurate, compliant, and informed. Here are the core responsibilities most accountants handle.

Preparing and analyzing financial statements

Accountants create your profit and loss statement, balance sheet, and cash flow statement. These reports show how your business is performing and where your money goes.

They also analyze trends in your financials to spot problems early and identify opportunities for improvement.

Managing accounts and ensuring accuracy

Accountants reconcile your bank accounts, track accounts payable and receivable, and catch errors before they become costly mistakes. Accurate records protect you during audits and help you make confident decisions.

Tax preparation and compliance

Accountants prepare and file your business tax returns, calculate estimated payments, and ensure you meet all deadlines. They stay current on tax law changes so you don't have to.

Financial planning and forecasting

Accountants help you create budgets, project cash flow, and plan for major expenses. This planning helps you avoid surprises and prepare for growth.

Types of accountants for small businesses

Different types of accountants specialize in different areas. Understanding these distinctions helps you find the right fit for your business needs.

Public accountants

Public accountants work for accounting firms or run their own practices. They provide services to multiple clients, including tax preparation, auditing, and consulting. Most CPAs are public accountants.

Management accountants

Management accountants work inside a single company. They focus on budgeting, cost analysis, and internal financial reporting. Small businesses rarely hire full-time management accountants but may use similar services from external advisors.

Tax accountants

Tax accountants specialize in tax planning and preparation. They help you minimize tax liability, claim all eligible deductions, and stay compliant with federal and state requirements.

Which type does your small business need?

Most small businesses work with a public accountant or CPA who offers a mix of tax, compliance, and advisory services. As your business grows, you may add specialized help for areas like payroll or financial planning.

When your small business needs an accountant

Hiring an accountant makes sense when your financial complexity outgrows your time, expertise, or software capabilities. Here are signs it's time to get professional help.

• Revenue exceeds $100,000 annually: Higher revenue means more transactions, tax obligations, and compliance requirements
• You're incorporating or changing business structure: Legal entity changes have significant tax implications that require expert guidance
• You're hiring employees: Payroll taxes, benefits, and labor compliance add complexity that accounting software alone can't manage
• Tax season causes stress or confusion: If you're unsure about deductions, deadlines, or filing requirements, an accountant reduces risk. The AICPA offers resources for free, confidential support through vetted helpline directories.
• You're spending hours on bookkeeping: Time spent on financial admin is time away from growing your business
• You need financing: Lenders and investors require accurate financial statements that accountants can prepare and verify

If accounting software handles your current needs, you may not need a full-service accountant yet. But as your business grows, professional support becomes increasingly valuable.

How accountants support your business strategy

Accountants provide strategic guidance that goes beyond tax filing and compliance. They help you understand your numbers, set meaningful goals, and make decisions that drive growth.

With accounting software, your accountant can set up real-time dashboards so you can check business performance anytime. When results fall short of targets, they help troubleshoot issues and adjust your approach.

Setting business goals and KPIs

Accountants help you define clear financial targets and track how you're progressing toward them. They'll work with you to set realistic revenue goals, identify key performance indicators, and create dashboards that show how your business is performing.

For new businesses, accountants test your idea's financial viability, estimate startup costs, and create revenue forecasts that satisfy lenders and investors.

Creating actionable budgets

Accountants build accurate budgets based on real data, not assumptions. A solid budget shows you the true cost of running your business, how much you can reinvest, and what you can pay yourself.

Without professional help, many businesses work from vague numbers that lead to poor decisions. Your accountant ensures your budget reflects reality.

Analyzing performance and identifying opportunities

By regularly reviewing your financials, an accountant can identify trends, highlight areas of overspending, and find opportunities to increase profitability. This advice helps you make informed strategic decisions.

Managing cash flow and financing

Cash keeps your business running. An accountant can help you manage it effectively and secure funding when you need it.

Improving cash flow management

Profitable businesses can still fail if they run out of cash at the wrong time. Late customer payments or unexpected expenses can leave you unable to pay suppliers or staff.

Accountants help you predict cash flow gaps before they happen. They create spending plans, build cash reserves, and develop strategies to keep money in the bank when you need it most.

Securing business loans and financing

Accountants prepare loan applications that lenders take seriously. They create accurate financial statements, build credible forecasts, and present your numbers in visual formats that communicate opportunity.

Your accountant knows which lenders are actively funding businesses like yours and can help you approach the right sources at the right time.

Managing debt strategically

Accountants help you distinguish good debt from bad debt and find borrowing strategies with favorable terms. They advise when to pay down loans versus reinvesting cash in your business.

If you need refinancing, your accountant can evaluate options and negotiate better rates. Their recommendations fit your financial situation, not generic advice.

Dealing with unpaid invoices

Accountants help you get paid faster and reduce time spent chasing overdue bills. They can:

• Set up automated invoice reminders that notify customers when payments are due
• Follow up directly with clients who don't respond to automated messages
• Arrange invoice financing if payments remain outstanding, converting unpaid invoices to immediate cash

Setting up accounting technology

Accountants implement software that automates routine financial tasks and gives you real-time visibility into your business. The right technology setup saves hours of manual work each week.

Implementing cloud accounting software

Your accountant configures cloud accounting software so sales and expense data flows automatically into your records. They connect your bank accounts, set up invoice tracking, and ensure everything syncs correctly.

Automating financial processes

Accountants set up automation that handles repetitive tasks without your involvement:

• Automatic invoice reminders: Send payment notifications to customers without manual follow-up
• Bank reconciliation: Match transactions automatically to reduce data entry
• Expense categorization: Sort purchases into the right accounts as they occur
• Recurring billing: Generate and send regular invoices on schedule

Integrating business apps and tools

Accountants connect your accounting software with other business tools:

• Cash flow dashboards: See your financial position in real time
• KPI tracking: Monitor business performance metrics 24/7
• Mobile apps: Manage finances from anywhere
• Payment processors: Accept customer payments seamlessly

Supporting business growth and operations

As your business grows, its complexity increases. An accountant can provide support to manage this growth and keep your operations running smoothly.

Hiring and payroll management

Accountants help you make smart hiring decisions and stay compliant with employment requirements. They can:

• Analyze which roles will have the greatest impact on your bottom line
• Calculate the full cost of hiring, training, and paying employees
• Set up payroll systems that handle taxes, insurance, and government reporting
• Ensure compliance with federal and state employment regulations

Inventory management

Accountants help you reduce inventory costs and avoid stockouts. They analyze the true cost of holding inventory, including storage, obsolescence, and tied-up cash.

Using your sales data, accountants forecast inventory needs so you can order accurately. They also set up inventory tracking software that monitors stock levels and triggers reorders automatically.

Improving business efficiency

Accountants identify unnecessary costs and help you operate more efficiently. They analyze spending across key areas:

• Storage costs: Include physical warehouse space and IT infrastructure
• Utility expenses: Cover electricity, gas, and other recurring costs
• Labor efficiency: Measure employee productivity and downtime

Your accountant develops strategies to reduce these costs without sacrificing quality or output.

Tax planning and compliance

Tax services go beyond filing returns. A skilled accountant helps you pay less tax legally, stay compliant year-round, and avoid costly mistakes.

Here's what comprehensive tax support includes:

• Lowering tax exposure: Identify all eligible deductions and credits to minimize what you owe
• Handling tax debts: Negotiate payment plans or resolve outstanding obligations with tax authorities
• Maintaining compliant records: Keep documentation organized and audit-ready throughout the year
• Preparing for and supporting audits: Represent your business if the IRS or state tax authority has questions

Proactive tax planning throughout the year typically saves more money than last-minute filing. Your accountant monitors changes in tax law and adjusts your strategy accordingly.

How to find the right accountant

Finding the right accountant starts with understanding your needs and knowing what to look for. Here's how to find a qualified professional who fits your business.

Finding qualified candidates:

• Ask other business owners for recommendations
• Check credentials and verify CPA certification if needed
• Look for experience in your industry or business size
• Evaluate their technology expertise and software preferences

Questions to ask potential accountants:

• What services do you provide beyond tax preparation?
• How do you communicate with clients and how often?
• What accounting software do you use and recommend?
• How do you charge for your services?
• Can you provide references from similar businesses?

Red flags to watch for:

• Showing reluctance to explain their fees or services clearly
• Having no experience with businesses your size or industry
• Using outdated technology or resisting cloud software
• Communicating poorly or responding slowly
• Guaranteeing specific tax savings before reviewing your situation

The right accountant should feel like someone you trust for guidance, not just a service provider. Take time to find someone you're comfortable having honest conversations with about your business.

Find a Xero advisor who understands cloud accounting and can support your business growth.

Work with your accountant seamlessly through Xero

Cloud accounting software makes collaboration easier between you and your accountant. Xero gives both of you real-time access to the same financial data, eliminating back-and-forth emails and outdated spreadsheets.

Here's how you benefit from using Xero with your accountant:

• Real-time data access: See your current financial position without waiting to send files
• Automated workflows: Automate bank feeds, invoice tracking, and reconciliation
• Built-in collaboration tools: Share documents, leave comments, and communicate within the platform
• Secure access controls: Grant your accountant appropriate permissions while protecting sensitive data

You can work with accountants who already know Xero. You can find a Xero advisor who knows the platform and can help you get the most from it.

Ready to simplify your accounting? Try Xero free for one month and see how cloud software transforms your financial management.

FAQs on working with accountants

Here are answers to common questions about hiring and working with an accountant.

How much does an accountant cost for a small business?

Small business accountants typically charge $150 to $400 per hour, or $1,000 to $5,000 annually for basic tax and bookkeeping services. Costs vary based on your business complexity and the services you need.

What's the difference between an accountant and a bookkeeper?

Bookkeepers record daily transactions and maintain your financial records. Accountants analyze that data, prepare financial statements, file taxes, and provide strategic advice. Many small businesses need both services.

Do I need a CPA or will a regular accountant work for my business?

A CPA is required for audited financial statements and certain tax filings. For most small business needs like tax preparation and financial advice, a qualified accountant without CPA certification can provide excellent service.

When should I start working with an accountant?

Consider hiring an accountant when your revenue exceeds $100,000, you're incorporating, hiring employees, or spending more than a few hours monthly on financial tasks. Earlier is generally better than waiting until problems arise.

How often should I meet with my accountant?

Most small businesses benefit from quarterly check-ins to review financials and plan ahead. During tax season or major business changes, you may need more frequent communication. Your accountant should be accessible when questions arise.