When running a small business, every dollar counts. Because of that, many small business owners simply use an accountant or try to navigate as much as possible out on their own. The problem with that idea? It often ends up being more costly, as business owners are not always knowledgeable of all of the potential write-offs, they risk potential audits, and representation, if necessary, is harder to find. 

A CPA, on the other hand, is a professional accountant who is licensed by their state. Their skill set and expertise, along with the capabilities the license allows, is essential for every small business owner, no matter the size of the actual business. 

Whether or not you should hire a Certified Public Accountant (CPA) for your small business depends on several factors, including the complexity of your financial affairs, your comfort level with financial management, and your budget. Here are some considerations to help you make an informed decision:

1. Business Complexity:

  • If your small business has complex financial transactions, multiple revenue streams, inventory management, or international operations, a CPA’s expertise can be invaluable. They can help ensure your financial records are accurate and compliant with tax laws and accounting standards.

2. Time and Expertise:

  • Managing the financial aspects of a business can be time-consuming. If you lack expertise in accounting, tax planning, or financial analysis, a CPA can save you time and help you avoid costly mistakes.

3. Tax Compliance:

  • CPAs can provide expert tax planning and compliance services, which can optimize your tax liability and ensure you meet all legal requirements. This can potentially save you money and prevent tax-related issues.

4. Financial Reporting:

  • If you need to produce financial statements for investors, lenders, or other stakeholders, a CPA can ensure your reports are accurate and in compliance with accounting standards.

5. Complex Tax Situations:

  • If you have a complex tax situation, such as dealing with multiple state taxes, international taxes, or tax credits, a CPA’s knowledge can help you navigate these intricacies.

6. Regulatory Compliance:

  • CPAs can help you comply with various regulatory requirements, such as those related to employee benefits, retirement plans, or industry-specific regulations.

7. Audits and Reviews:

  • If your business is subject to audits or financial reviews, a CPA can guide you through the process and ensure you’re prepared.

8. Financial Advice:

  • Beyond accounting and taxes, CPAs can provide valuable financial advice, budgeting, and forecasting that can help your business make informed decisions.

9. Business Growth:

  • If your small business is poised for growth or undergoing significant changes, a CPA can offer strategic financial planning and advice to support your expansion.

10. Cost vs. Benefit:

  • Consider the cost of hiring a CPA compared to the potential benefits, such as tax savings, financial accuracy, and peace of mind. Weigh the financial advantages against the cost of their services.

11. Time Savings:

  • A CPA can free up your time to focus on running and growing your business, as they handle financial and tax matters on your behalf.

12. Education and Training:

  • If you’re willing to learn and invest time in understanding accounting and tax regulations, you may be able to manage your finances without a CPA. However, keep in mind that this can be time-intensive and may have a learning curve.

Ultimately, the decision to hire a CPA for your small business should align with your specific needs, financial situation, and long-term goals. Some small businesses may benefit from periodic consultations with a CPA, while others may require ongoing financial management services.

It’s a decision that should be made based on your business’s unique circumstances and your own financial management capabilities. Consulting with a CPA for an initial assessment can help you determine the level of support that’s right for your business.

1. CPAs must have up-to-date knowledge to hold their license

Unlike an accountant, a CPA is required to keep current with tax laws in order to maintain licensure. In addition, CPAs are mandated to fulfill continuing education requirements. This means, when working with a CPA, you know your business will be taking advantage of and in accordance with all laws and regulations. 

Accountants are able to perform audits, prepare financial statements, help with bookkeeping, complete business tax preparation, and advise on accounting systems. However, there are some audits, such as mandatory audits for publicly traded companies, that only a CPA can complete.   

2. CPAs can represent their clients

Accountants have specific but limited representation rights. They are only able to represent a client if they have prepared and signed that client’s tax returns. CPAs, however, have the ability to represent clients in a number of cases, including those involving payments and collections, audits, and appeals. 

3. CPAs represent clients before the IRS in audits

The primary benefit to working with a CPA over an accountant is that a CPA has the ability to represent you if you receive an IRS audit. Following an audit, an appeals process may be the next step, and if violations are found, you will likely need representation. A CPA, with expertise in all tax laws, would play a pivotal role in helping your company should this occur.

Hiring a CPA can save your business time, money, and a wealth of anxiety. By contacting a local CPA firm in Charlotte, you are ensuring everything is done correctly the first time and avoiding the headache of an audit or potential penalties in the future.

Resources:

https://www.thebalancesmb.com/small-business-cpa-versus-accountant-397384