Small business owners and entrepreneurs getting ready to open a business often wonder when, or even if, they should hire a certified public accountant. While many people feel they can save money by doing the daily bookkeeping tasks with computer software, the expertise of a CPA can bring much needed financial consulting that can potentially save a business from making costly mistakes.
CPA’s differ from accountants in that, while both have accounting degrees, CPA’s have obtained a state license that also incorporates tax law. A CPA undergoes rigorous training and exams to receive this license as well as ongoing continuing education to maintain the certification’s requirements. With this designation, the CPA has unlimited representation rights before the IRS, which can come in handy should the business experience tax issues.
It is important to note that a business does not necessarily need to hire a full time or even part time CPA in order to benefit from this professional representation. Many CPA’s offer their services to small businesses as consultants, contracting for one or more meetings to discuss the financial footprint of the business. There are, however, times when a business should hire a CPA, and understanding those scenarios is important to the business’s financial future.
When launching a new business, a CPA can provide assistance that will lay the groundwork for it’s financial base. Investing part of the start up money into a few hours with a CPA can ensure that the business is set up correctly so that costly mistakes are avoided down the road. In this vein, CPA’s are financial advisors, assisting in the legal set up of the business that will determine its tax structure, as well as determining what type of accounting system should be used.
CPA’s can also benefit a business at tax time, filing returns and planning strategies for minimizing tax liabilities for the next year. Filing taxes for a business has many implications for its owners personal liabilities, and keeping abreast of current law can be difficult. CPA’s can streamline this process and represent the business if any communication with the IRS is needed.
As the business grows, or there are decisions regarding expanding, buying or selling, a CPA can assist in planning structural and operational changes. Understanding the financial implications of mergers, partnership dissolving,or any other significant restructuring or changes, is a CPA’s area of expertise. Smart business owners involve CPA’s in any process related to change.
While initially it may be easy to place the expense of hiring or contracting with a CPA on the back burner during the planning phases of launching a business, it is not always a wise decision to do so. CPA’s are important members of any business team, and having a trusted financial advisor on your side is the best way to ensure success.