- BRW Tax & Accounting
10 Reasons You Need a CPA on Your Side
When it comes to small and medium-sized businesses (SMEs), the need for a certified public accountant (CPA) has become more impertinent than ever. Today, there’s a reason as to why CPAs are hailed as saviors for small businesses.
Hiring a licensed CPA may likely push your business in the right direction. In fact, a CPA can figure out common redundancies that may have been missed by you previously. In simple terms, a CPA is comparatively more qualified than a bookkeeper and even an accountant.
As much as you’d like to take care of the daily business operational activities on tax software, there are bound to be limitations. Besides, a specialized human touch will help you make logical business decisions and avoid mistakes regularly.
Learn the Difference Between an Accountant and CPA
Typically, a CPA takes an extensive state governed exam from the State Board of Accountancy that generally takes a couple of days. Accountants, for instance, don't undertake such a rigorous level of examination to maintain a license for future practice.
In simple terms, an accountant refers to a financial or tax adviser that adheres to basic tax rules and regulations set forth by GAAP. Similarly, CPAs possess the same knowledge as the accountants, but the state examination allows them a comprehensive input to assess the tax situation of a business. In essence, all CPAs can be classified as accountants, while accountants cannot be viewed as CPAs.
Today, CPAs are serving small businesses than any other tax professional. In fact, small businesses have come to rely on the expertise of CPAs for specific circumstances. Besides, CPAs have relatively distinct advantages over other tax professionals that qualifies them to perform added responsibilities.
1. It’s Time to Reduce Your Debt
Resolving debt issues can turn out to be a nightmare for small businesses. Furthermore, negotiating credit can lead to more hurdles along the way for your business. You don’t necessarily have to deal with the creditors directly; CPAs are perfectly qualified to turn an unreasonable situation into a favorable one.
2. Continuously Improve Your Credit Rating
Whether you run a small business or just launching a business, your ultimate goal is to improve credit rating through fair means. The fact is, paying bills on time isn't just going to cut it any longer. You want detail-oriented results that can speed up the functional process of your business. Consequently, there is a good chance for CPAs to use his/her tactics to help you improve your credit rating.
3. Navigate and Manage Multiple Incomes
It is true – things can get quite foggy when you have multiple sources of income. In fact, the slightest of mistakes can trigger a tax audit. Naturally, you want to protect your income and the state of your business. And this is where CPAs can make the most difference. Furthermore, a CPA can collectively sort out tax complexities and will record more information than just you’re W-2.
4. Ideal for Entrepreneurs and Self-Employed
CPAs don't just translate into the best possible advice. They would willingly give you real financial advice. Speaking of honest judgment, self-employed individuals can make the most out of CPAs' expertise. If you solely own a business, it is imperative to find new methods to lower taxes.
5. Dive into New Business Venture
It is one thing to formulate a business idea out of thin air and entirely another to fill out all the relevant forms. Therefore, seek out a CPA that can help you prepare and file all the required forms correctly to start a new business venture.
6. Long-term Valuation
As a small business owner, the end-goal is always to create long-term value for your business. However, it is easier than done when you are on your own. To navigate through a large amount of cash or property, you need a CPA who champions specificity. Ultimately, you want to reduce your taxes and attain business growth in the foreseeable future.
7. Error-free Calculations
Here’s the thing, small businesses can’t afford to make mathematical mistakes. And if you find calculating numbers exhausting or instinctively bound to make mistakes – it would be wise to get a professional CPA who is trained to pinpoint calculative mistakes and make necessary adjustments.
Whether you make intentional or unintentional calculation mistakes, an audit by the IRS should be least of your concern. What's the solution? CPAs can collectively analyze your work and cut out certain tax elements that lead to a tax audit. To survive and thrive in current business conditions, hiring CPAs have become standard. Besides, the quality of service you will get makes it worthwhile.
8. Transition Period
The last thing small businesses want is to get stuck in a transitory period. You are, after all, bound to make some life or business change that would impact your operational activities. Whether you want to get married, plan to have family, or intend to retire, a number of reasons can create hurdles for the financial health of your business. CPAs can seamlessly navigate the changes and help you make viable decisions to maintain your current business growth.
9. Paying the Right Unpaid Taxes
Small business owners often get entangled in the cobweb of back taxes to the IRS. Delay or failure to pay back unpaid taxes can result in harsh penalties. CPAs can help you realize what you may or may not owe to the IRS and will be beside you every step of the way.
10. CPA's are Real Estate Specialists
The need to hire a CPA is of utmost significance when you own rentals or run a real estate agency. Unlike other taxation rules, rental properties are quite specific. The right thing would be to seek the assistance of a professional CPA to take advantage of all the associated perks.
In addition, forming a mutual friendship with a CPA can save an ample amount of time. Apart from doing an effective job, a CPA will lift a fog of confusion and can answer all of your questions. And when your financial strength and business objectives are in place, you will save money inevitably.
Final Thoughts: Collaborate with CPAs
Your goal should be to find a CPA that can perform the responsibilities of a bookkeeper and an accountant. Remember, an experienced CPA can prepare taxes and make sound decisions as per the nature of your business. Additionally, you can even ask your CPA to review and confirm the information on your tax returns. It would be best to form a collaborative relationship with your CPA to improve your business and eventually set yourself for retirement.