Most small business owners think they can get away with not hiring a CPA and can handle their finances on their own. Although entrepreneurs prefer this DIY approach to tax and accounting services, it’s not always the best option for the long-term future of your business. As a business owner, it is important to focus on growing the business, increasing revenue, and retaining customers. Hiring a good accountant can be the secret weapon to a successful business.
CPA vs. Accountant
Accountant is a general term that describes a person whose job is to keep or inspect financial accounts. Accountants follow specific rules and regulations, including Generally Accepted Accounting Principles, also known as GAAP, which are rules and standards set by the Financial Accounting Standards Board.
A Certified Public Accountant (CPA) is an accountant who has met state licensing requirements. Although requirements vary by state, they typically include minimum education (usually a bachelor’s degree in accounting) and experience requirements, plus passing the CPA exam.
Hiring a good Certified Public Accountant (CPA) is well worth the expense. Here’s why.
Since a CPA is licensed by a state they must keep current with tax laws in order to maintain a license in that state. Accountants, on the other hand, are not licensed. A CPA must pass the CPA exam which is an extremely rigorous process with testing over multiple days, including many facets of financial and tax expertise. After they are licensed, CPAs must also comply with continuing education requirements in order to maintain the licenses previously obtained. Accountants do not have any of these requirements, and may not have all the up to date knowledge a CPA does.
Legally Structuring Your Business
Is your small business a sole proprietor, corporation, or LLC? A good CPA can offer expert advice on the best legal option and tax implications of these options for setting up your particular enterprise.
Tax Laws and IRS Auditing
A CPA can help the small business owner navigate the myriad of regulations and requirements from not only a federal perspective but state and local regulations as well. While not all CPAs specialize in small business taxes, almost all CPAs are more familiar with tax laws compared to accountants. Having in-depth knowledge of the tax laws are an in-depth part of the CPA’s licensing exam and many CPAs take tax courses every year to keep up to date on the Tax Code.
Additionally, probably the biggest reason to use a CPA for your business taxes is that a CPA is eligible to represent you before the IRS in an audit while an accountant is not. Should IRS auditing ever occur, you definitely need a CPA to represent you, one who is well versed in the audit process and can asset you in working through it. Although your accountant may have signed off on your tax returns, they can not represent you in front of the IRS.
As a business grows and evolves, a CPA can act as a strategy advisor by creating or updating the business plan, budgets and forecasts on a periodic basis. As we discussed above, CPAs have the ability to work with attorneys in determining the most appropriate form of business to set up, bankers in obtaining financing, as well as the government offices that regulate small business in the country and state.
Applying for a loan
Obtaining a small business loan can sometimes be tough. Your lender will require 100% accurate financial statements. Here, your CPA can work directly with the lender in establishing your qualifications.
A small business’s CPA can be their most reliable referral source. CPAs work with a variety of bankers, payroll companies, insurance agencies, attorneys, and human resource specialists. They have the knowledge and expertise to recommend the best for your small business and industry and can act as a liaison between the service and business owner to ensure the best interest of the small business are kept in mind
Working with Limitless Investment and Capital’s Certified Public Accountants
At Limitless Investment and Capital, we offer small business bookkeeping services as well as more in-depth accounting services offered by our Certified Public Accountants. While working with Limitless Investment and Capital, your small business has the ability to separate the more routine financial jobs from the tax and financial analysis done by the CPA. Our small business bookkeepers are able to handle monthly, quarterly, and yearly financial reports while consulting with our CPAs. Our Certified Public Accountants are able to handle your small business taxes and sign off on your tax return. To learn more about our services and rates, contact us TODAY!