When to hire an accountant for your small business

Published Saturday 7 March 2026

Table of contents

• Do you need an accountant for your small business?
• Signs it's time to hire an accountant
• What to consider before hiring an accountant
• You'll need advice when you write a business plan
• You'll need advice about your company's legal structure
• When your finances become too complex to manage alone
• When tax time and compliance feel overwhelming
• You'll need an accountant when you apply for a business loan or overdraft
• When your company is growing, hire an accountant
• When buying or selling a business
• How Xero and your accountant work together
• FAQs on hiring an accountant

Key takeaways

• Recognise when your financial tasks are taking too much time or becoming too complex by watching for signs like spending more than a few hours weekly on bookkeeping, making frequent errors, or feeling overwhelmed during tax season.
• Consider your specific needs before hiring by evaluating your budget, determining whether you need a bookkeeper for daily tasks or an accountant for strategic advice, and looking for someone with experience in your industry.
• Involve an accountant during major business milestones like writing a business plan, choosing your legal structure, applying for loans, or buying and selling a business to ensure professional financial guidance and credibility.
• Combine accounting software with professional expertise to get the best results, using tools like Xero for routine tasks while relying on your accountant for tax strategy, compliance, and financial planning.

Do you need an accountant for your small business?

Hiring an accountant makes sense when your financial tasks take too much time, feel too complex, or carry too much risk to handle alone. In fact, research shows up to 78% of small businesses are facing management accounting (MA) challenges stemming from issues with organisation, systems, and resources. Many small business owners manage their own books early on, but there's a tipping point when professional help pays for itself.

You may not need an accountant if your business is simple and you have time to manage the books yourself. But as your business grows or your finances become more complex, the cost of mistakes often outweighs the cost of hiring help; it's estimated that accounting errors and manual reporting cost U.S. businesses around $7.8 billion annually.

Here's a quick way to think about it: if doing your own taxes takes 10 hours and your time is worth $100 an hour, that's $1,000 in lost productivity. An accountant may cost less and reduce your risk of errors.

If you're still unsure, look for specific signs that it's time to bring in professional support.

Signs it's time to hire an accountant

Recognising the right moment to hire an accountant can save you time, money, and stress. Here are common signs that professional help is worth the investment:

• You're spending too much time on bookkeeping: If admin tasks take more than a few hours each week, that's time away from growing your business.
• You're making frequent errors: Mistakes in invoices, tax filings, or reconciliations can lead to penalties and cash flow problems.
• Tax time feels overwhelming: Dreading tax season or missing deadlines signals you need expert support.
• You're losing track of cash flow: If you're unsure what's coming in or going out, an accountant can bring clarity.
• Your business is growing quickly: Rapid growth brings complexity that DIY methods can't keep up with.
• You're facing a major business change: New hires, new locations, or significant purchases all benefit from professional guidance.
• You need funding: Loan applications and investor pitches require accurate, professional financial records.

If you recognise two or three of these signs, it's worth exploring your options.

What to consider before hiring an accountant

Before you hire an accountant, think through what kind of help you actually need. The right fit depends on your budget, business stage, and the complexity of your finances.

Here's what to evaluate:

• Budget: Accountants charge hourly rates or fixed fees. Consider what you can afford and weigh it against the time and money you'll save
• Type of help: Decide whether you need a bookkeeper for day-to-day tasks, an accountant for financial oversight, or a CPA for tax strategy and compliance
• Scope of work: Determine if you need ongoing support or help with a specific project like tax filing or business setup
• Industry experience: Look for someone who understands your type of business and its unique financial challenges
• Credentials: Check qualifications and professional memberships to ensure you're working with a qualified expert
• Compatibility: Choose someone you can communicate with easily and trust with sensitive financial information

You can find qualified accountants through the Xero Advisor Directory, which connects you with professionals experienced in cloud-based accounting.

You'll need advice when you write a business plan

An accountant can strengthen your business plan by adding realistic financial projections and professional reports. This makes your plan more credible to investors and lenders.

Involving an accountant early gives you expert financial guidance. You'll create more accurate projections than DIY methods typically produce.

The business plan template can help you get started with the structure, while an accountant ensures your numbers are sound.

You'll need advice about your company's legal structure

An accountant can help you choose the right legal structure for your business, which affects your taxes, personal liability, and how you operate.

Business structures vary by country, but common options include:

• Sole trader or proprietor: You work under your own name and may offset some living expenses against tax, but you're personally liable for business debts.
• Limited liability company: Your personal assets are protected from business debts, though some exceptions may apply.
• Partnership or corporation: Different rules apply depending on how ownership and liability are shared.

Each structure has trade-offs. An accountant can explain your options and help you decide which one fits your goals and risk tolerance.

When your finances become too complex to manage alone

Your finances have outgrown DIY methods when you're losing track of who owes you money, missing payment deadlines, or struggling to understand your cash position. An accountant can restore clarity and control.

Here's how an accountant helps when complexity increases:

• Tracking receivables: Know exactly who owes you money and when payments are due.
• Measuring key metrics: Monitor ratios like payroll costs to revenue so you can spot trends early.
• Managing payroll: Ensure employees are paid correctly and on time.
• Providing real-time insight: Access dashboards and reports that show your financial position at a glance.

With cloud-based accounting software, your accountant can share your accounts instantly. You'll always know where your business stands financially.

When tax time and compliance feel overwhelming

An accountant simplifies tax filing and compliance so you can focus on running your business instead of worrying about deadlines and regulations. Many small business owners hire an accountant when their first tax filing is due, but the benefits extend far beyond tax season.

Here's what an accountant can handle for you:

• Filing tax returns: Complete and submit accurate returns on time.
• Tracking tax law changes: Stay compliant as regulations evolve.
• Preparing annual accounts: Produce statements that meet legal requirements.
• Managing government registers: Keep your company status and director records up to date.
• Handling payroll compliance: Ensure employee tax codes and payments are recorded correctly.
• Organising share records: Track stock allocation when partners join or leave.

Accurate tax preparation often saves more money than the accountant's fee. A good accountant will also identify ways to improve cash flow and reduce your tax burden.

Audit support

If your business is audited, an accountant can guide you through the process and help you respond correctly. Some accountants offer audit insurance, which covers their fees if you face an official enquiry or investigation.

Have an accountant in place before an audit happens. Good accounting software also helps by maintaining a clear audit trail of all transactions and approvals.

You'll need an accountant when you apply for a business loan or overdraft

An accountant strengthens your loan application by presenting accurate financial records and realistic projections that give lenders confidence. Research confirms this, showing that companies with the highest management accounting know-how also have the best average solvency. Banks want assurance they'll get their money back, and professional financial documentation shows you're serious about your business.

Here's how an accountant helps with funding applications:

• Preparing financial statements: Present clear, accurate records that back up your application.
• Creating revenue projections: Show lenders realistic forecasts based on sound data.
• Answering lender questions: Respond confidently to queries about expenses, cash flow, and growth plans.
• Comparing loan options: Evaluate terms, conditions, and interest rates to find the best fit.

Having an accountant involved signals to banks that your business is well-managed. This credibility can make the difference between approval and rejection.

When your company is growing, hire an accountant

An accountant helps you manage growth by handling the financial complexity that comes with scaling. Rapid expansion brings new challenges like payroll, tax obligations, and cash flow management that can overwhelm DIY systems. A study of common business challenges found they often relate to resources (23%), organisation (20%), and personnel (18%).

Here's how an accountant supports business growth:

• Managing payroll and employee taxes: Handle the admin as your team expands.
• Tracking cash flow: Monitor incoming and outgoing funds as transaction volume increases.
• Analysing pricing and inventory: Use data to make informed decisions about products and margins.
• Planning for expansion: Identify the right time to hire, move premises, or launch new offerings.

Growth is exciting, and proper preparation keeps your finances on track. An accountant keeps the details under control so you can focus on the bigger picture.

When buying or selling a business

An accountant protects your interests during major business transactions by uncovering hidden risks and optimising the financial outcome. Whether you're acquiring a company or exiting one you've built, professional guidance helps you make sound financial decisions.

Before buying a business

Consult an accountant before purchasing an existing business. They'll review the company's accounts to identify potential problems, including:

• Asset ownership: Confirm whether equipment is fully owned, leased, or part-paid.
• Outstanding debts: Uncover liabilities that could become your responsibility.
• Financial accuracy: Verify that reported revenue and expenses are accurate.

Working with both an accountant and a lawyer gives you a complete understanding of what you're buying. You'll have confidence that you're getting what you're paying for.

Before selling your business

An accountant prepares your business for sale by organising financial records and presenting them professionally. They can help you:

• Prepare statements of accounts: Show prospective buyers clear, accurate financial information.
• Support due diligence: Respond to buyer enquiries and work with their accountants.
• Structure the sale for tax efficiency: Determine whether a lump sum or staged payments will leave you with more money after tax.

Every sale is different. A good accountant helps you get the best possible result from the transaction.

How Xero and your accountant work together

Combining Xero with an accountant gives you the best of both worlds: powerful software that automates routine tasks and expert guidance for complex decisions. You stay in control while benefiting from professional support.

Here's how the partnership works:

• Real-time collaboration: Cloud-based accounting means you and your accountant always see the same up-to-date information.
• Clear insight: Dashboards and reports show your financial position at a glance.
• Efficient workflows: Xero handles data entry and reconciliation, freeing your accountant to focus on strategy and advice.
• Seamless communication: Share documents, ask questions, and get answers without scheduling meetings.

Your speciality is running your business. Let Xero handle the admin and an accountant handle the expertise.

Find a Xero-certified accountant in your area through the Xero Advisor Directory. Ready to see how easy collaboration can be? Get one month free and start working smarter with your accountant today.

FAQs on hiring an accountant

Still have questions about when and how to hire an accountant? Here are answers to some common concerns.

When should you start using an accountant?

Consider hiring an accountant when your finances become too time-consuming or complex to manage alone. While many people first seek help at tax time, working with an accountant year-round helps you stay compliant and identify savings opportunities throughout the year.

How much does it cost to hire an accountant?

Accountant fees vary based on the complexity of your needs and whether you pay hourly or on retainer. Fixed-fee packages for specific services like tax filing are also common. The cost often pays for itself through time saved and improved accuracy.

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

A bookkeeper handles day-to-day financial tasks like recording transactions, reconciling accounts, and managing invoices. An accountant provides higher-level services like tax planning, financial analysis, and strategic advice. Many small businesses use both, or start with a bookkeeper and add an accountant as they grow.

Can I use accounting software instead of hiring an accountant?

Accounting software like Xero handles routine tasks like invoicing, bank reconciliation, and expense tracking. But software can't replace the expertise an accountant brings to tax strategy, compliance, and financial planning. The best approach combines both: software for efficiency and an accountant for expertise.

How do I find the right accountant for my business?

Look for an accountant with experience in your industry and the credentials to match your needs. Ask about their communication style, fees, and how they work with clients. The Xero Advisor Directory connects you with professionals experienced in cloud-based accounting who can collaborate with you in real time.