Many business owners just do not have time to deal with their own financials or just need some expert guidance. There are many advantages to having a CPA accountant on your business team. Having an accountant on your team can help with you by providing an unbiased perspective on your financial matters with expert-level accounting guidance. Our accountants at Jack Trent & Company CPA have knowledge and experience spanning various industries.
Many small business owners dread accounting and do not fully understand their financial details.
For many small businesses, accounting is a necessary evil. It often feels like an annual, annoying chore that happens once a year. Business owners consolidate all of their financial information for the year and other tax-related information to help lower their tax burdens for any particular year. Financial information may even be required quarterly to pay sales tax or in the case of federally registered public companies.
Your accounting team can bring a lot value to you as a business owner so here are a few tips and questions to help you get the most value out of your CPA. Once you are ready to visit your CPA’s office, it is wise to be organized and be ready with all relevant documents. Giving your CPA accounting team accurate information in the first place will alleviate rework or costly mistakes. Anyone that has had to amend their taxes can tell you it takes a very long time for the IRS to process corrected tax returns. Also, having your financial information readily available will making the meeting with your CPA accounting team much more productive.
You should be able to feel comfortable with your CPA. If you can’t provide them to truth about your confidential information, then you should consider looking for another CPA. Your accounting team will only be as accurate as the financial information that they receive. Clear and healthy communication is also very key utilizing your CPA. Accountants can be CPAs but they are never mind readers so communicate all financial information to your accountant. Ask your CPA to know the best way to get a hold of him or her and what is the best method for reaching out to your accounting team.
How is my business doing financially?
One question that may be lingering in many business owner’s heads is “How is my business doing financially?”. Numbers are meaningless if they are not telling you how your business is doing. It is important that people can make sense of the information to make future strategic business decisions. Some fundamental questions to your CPA regarding your business’s financial health:
Do I have enough cash to support my short-term business operations and needs?
Am I making enough money?
Are there opportunities to make more money?
Is the IRS happy with my business from a tax perceptive?
Many businesses fail because they do not have enough funds to survive short-term financial obligations, or they do not have enough liquidity. Accurate financial reporting will help you see what kind of cash and profit your business is actually making. CPAs can often recommend a change or strategy that can often improve profitability. Lastly, your CPA should ensure that your business is in tax compliance and in the case of a potential IRS audit, your CPA is line of defense.
How can I grow my business?
There are many growth strategies that your CPA can help you analyze which strategy works for your business. Growing your business will usually entail increasing your labor force or acquiring equipment to increase in capacity. A common strategy to growing your business is hiring more people. Your accountant should be able to help you determine the cost of hiring more people which would include salary, taxes, insurance, and training costs.
Acquiring more equipment is also another avenue for growing a business. Your CPA should be able to provide you a buy versus lease cost benefit analysis on equipment to expand your capacity. There are also tax considerations when buying fixed assets (property, plant, and equipment) such as 179 deduction or bonus depreciation that your accounting team should advise you on.
Before you engage in any important financial decision, it wise to involve your CPA!