If you own a small business, you should consider hiring a certified public accountant (CPA) to oversee many of your accounting tasks. A CPA is an accountant who has passed a state licensing exam and is highly qualified to provide professional accounting services.
Although business owners may be experts in their field or industry, they aren’t usually tax or legal experts. That’s why you want to make sure your accounting needs are in the right hands.
It doesn’t matter how small your business may be, you will benefit from CPA services. Let’s take a look at the benefits of hiring a CPA.
CPA vs. Accountant
The term “accountant” refers to financial and tax professionals who follow specific rules and regulations. A CPA is an accountant who has passed a difficult licensing exam.
All CPAs are accountants, but all accountants aren’t CPAs. An accountant may be able to handle some of your business’s financial needs, but there are many circumstances where having a CPA is a better choice.
CPAs can perform detailed financial analysis and offer expert advice on financial and tax matters. A CPA can represent you before the IRS in case of an audit, but an accountant cannot.
Licensure
An accountant can use the title of CPA only if they are licensed to do so in their state. This requires years of study and continuing education to keep up with changing tax laws.
The licensing exam for a CPA is difficult. Passing it requires a thorough understanding of many areas of financial and tax law.
A CPA must understand and follow changes in tax law to better serve their clients.
Knowledge of Tax Laws
CPAs understand tax laws. A thorough knowledge of tax code is necessary to pass the CPA licensing exam.
Many CPAs take classes each year to stay up to date on the current tax code. The IRS requires all tax preparers to have a tax ID number (PTIN) and distinguishes between CRAs, attorneys, and uncredentialed tax preparers.
An accountant may be able to prepare and sign your business’s tax return, but you have no assurance of their competency. Above all, only a CPA can represent you before the IRS.
Your CPA should help you run your business in the most tax efficient way possible. Without the guidance of a CPA, you could end up paying more in taxes than you have to.
Financial Analysis and Advice
Bookkeepers perform tasks of data entry such as input of business income and expenses into financial software programs like Quickbooks. An accountant can review the data and other financial reports like balance sheets and profit and loss statements.
A CPA has the expertise to do a more in-depth analysis of monthly and yearly reports and advise you on the financial wellbeing of your business. A CPA has extensive training and certification to ensure you will receive trustworthy financial advice.
Best Practices
Your CPA should help you determine the best systems for bookkeeping and accounting for your business. They can help you maintain the proper controls and correct procedures to manage revenue.
These financial and tax professionals can create reports that help you see at a glance where your business finances stand. Your CPA should be a resource for managing your expenses and investments.
Understanding the best practices for your business is critical for success and future growth. Having a CPA to guide you through best practices could save you from rookie mistakes and save you money over time.
IRS Audits
No business owner wants to learn they are facing an IRS tax audit. Protect yourself from this situation with a professional CPA.
A CPA can represent you in the event of an IRS audit, but an accountant can only do this in a very limited manner. Using a CPA for your business taxes is your best bet.
When you choose a professional to prepare your business taxes, make sure they have the full authority to represent you and execute claims on your behalf.
Although accountants can complete tax returns for your business, a CPA can analyze the numbers, help you with complex business decisions, and represent you in an audit.
Although a CPA may charge more than an accountant, in this situation, you get what you pay for.
Leave it to a Professional
Accounting is a specialty profession that requires years of study and a state licensing exam to become a CPA. You may feel tempted to try to handle your business’s financial matters on your own, but that could be the wrong choice for your business.
A CPA understands how to analyze your financial data and how to run your business in the most tax efficient way. Trying to save a little money doing it yourself could cost you more than you bargained for down the road.
Unless you are a skilled accountant, it’s better to have a tax professional on your side.
Hiring a CPA Who Understands Your Needs
You need to be able to communicate with your CPA. They need to understand your business and your business’s accounting needs.
Before you hire someone, consider what you are looking for. Think about the qualities you want in a CPA and come up with a list of accounting needs.
Consider what you may need down the road as well. If you are uncertain about your needs or what a CPA can do for you, speak with a CPA to discuss your business and how a CPA can help.
As a business owner, you’re busy running your business. You may think that handling your business’s accounting and financial decisions yourself will save you money, but that’s not necessarily true.
In fact, you could save money and lower your stress level in the long run by hiring a CPA. You can run your business and leave the accounting to a financial professional.
If you are looking for a CPA firm, we’d love to talk with you. Contact us today.
