Erik is pretty active on Twitter. He often gets questions about entrepreneurialism there. One of the questions he gets asked often by new business owners, or people who are thinking about starting their own business, is whether they need an accountant in the beginning. The short answer is no, not in the beginning.
When Erik first started as a freelancer years ago he was a one-man show. He was working from his dining room table for just a couple of clients. His expenses were minimal and he was only getting paid about once a month from those few clients. It was pretty easy for him to keep the books himself at that point. Those jobs got rolled into his personal taxes so it was fairly simple for him to file his taxes himself in the beginning too.
It wasn’t until he hired his first employee that he decided to hire an accountant. He wanted to make sure he did things right with payroll and taxes.
These days at Array Digital we use a CPA. a CPA is a highly trained accountant who specializes in handling complex tax situations. With 11 employees (some in different states), and yearly revenue at $1.7 million, we’re at the point where working with a CPA is the right thing for us.
If you’re just getting started though, Erik says you don’t need an accountant right now. He recommends you focus on validating your offering so that people will want to buy from you. There will come a time when hiring an accountant becomes necessary but the early days is not it.