Small business accountants can do more than help you file your business taxes. They can also set up an accounting system, help you prepare financial statements, audit your books, and create financial goals for your business. If you think your business could benefit from the help of a certified public account (CPA), read on.
Here’s a closer look at what they do, how they can help your business both in the short- and long-term, and how to find the right finance pro for your company’s needs and budget.
Key Points
• Certified public accountants assist small businesses with tax preparation and financial planning.
• It may be worth hiring a CPA if you need help filing your business taxes, your business is growing, or you need help preparing financial documents.
• To find the right CPA, consider tapping your professional network and local organizations for referrals.
• Accountants and CPAs perform similar functions, but only a CPA can represent you in front of the IRS.
• Interview and vet CPA candidates by checking their industry experience and credentials.
Does Your Business Need an Accountant?
To determine if your company needs an account, it helps to understand what CPAs do and how they may be able to help your small business.
What Accountants Do
A certified public accountant can help with many aspects of small business accounting, including:
• Preparing personal and business tax returns and filing them on your behalf
• Preparing the documents needed to submit an application for a small business loan or grant
• Helping your business manage its day-to-day finances and cash flow
• Notifying you of clients and customers who have a habit of paying late
• Warning you about increasing costs that may affect your business, as well as helping you find affordable alternatives
• Analyzing daily, weekly, monthly and seasonal cash flow patterns in your business
• Illustrating key financial ratios for your small business
• Recommending areas to consider expanding or shrinking your business
• Helping you establish a weekly and monthly budget for your business
• Taking care of your company’s payroll
• Helping you prepare financial statements for potential investors or lenders
If you need something more specific, contact a CPA and ask if they can do it. You may find they can help you with your unique issue, whether it’s choosing accrual vs. cash accounting or how to expand your business into another state.
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When You Might Need a CPA
Here are some common business scenarios in which you may need a CPA to help you out.
• You need to change your business classification. As a business owner, there are a number of different ways you can structure your business. A CPA can help you choose the best set-up so you’re not overpaying come tax time. Even if you decide you don’t want to make a change, an accountant may be able to help you make the most of your current structure.
• Your business is growing. When a company grows, its finances typically become more complex. As more money comes in and goes out, and you begin to work with more vendors and hire more employees, cash flow can be difficult to keep track of. A CPA can help you with this by staying on top of payments, payroll, and everyday expenses. Small business owners often try to save money by not delegating tasks that a CPA can do, but the truth is that CPAs very often save businesses money, leaving the business owner more time to do what they do best — coming up with great ideas that can grow the business.
• You don’t understand taxes, deductions, and tax credits. You may be a wiz at developing products and acquiring new customers, but if taxes are like another language to you, then you likely need a CPA. It’s not that it’s beyond your ability to learn, but the more time you spend working on it, the more time you’re taking away from your business. Moreover, each year many business owners make mistakes, such as overpaying on their taxes.
• You need help preparing financial documents. Whether you are selling your business or looking to get small business financing, a professionally prepared financial report by a CPA can make the process go more smoothly. When going through the application process for a loan, a CPA can directly answer any lender’s questions about your financials.
• You’re being audited by the IRS. Small business audits are not uncommon for businesses with complicated tax returns. Low annual revenue and a large amount of expenses can also be triggers for an IRS audit. A CPA can help the audit process by providing documents and backup information an auditor requests, allowing you to focus your attention on running your business.
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4 Steps to Finding a CPA for Your Small Business
Wondering how to find a good accountant for your small business? These four steps can help you hone in the best pro for your needs.
1. Ask fellow professionals in your circle. A good place to begin your search for an accountant is by asking your peers, such colleagues and other business owners in the community, for recommendations. People in your network are likely to have a good handle on what you need and may be able to offer feedback on CPAs they’ve worked with.
2. Tap social media channels. You might also join local business communities on Facebook or LinkedIn (if you haven’t already), then post that you’re looking for a good small business accountant. It’s not necessary for your CPA to be local, but it could be beneficial if they are, especially if they have connections with local banks.
3. Check their credentials. Both accountants and CPAs perform similar functions, but a CPA has met state licensing requirements in order to earn the CPA designation. A CPA is also able to represent you in front of the IRS (not all tax preparers can do so). You can check an accountant’s credentials on the IRS’s Directory of Federal Tax Return Preparers.
4. Conduct an interview. It can be a good idea to schedule a meeting with a CPA to discuss why you are seeking their services (making sure you ask the questions below). Not all accountants specialize in the same things, so it’s very possible they may direct you to another CPA who is better suited for your needs, or you may feel a need to continue your search.
Evaluating an Accountant
While interviewing a potential CPA, you’ll want to ask a wide array of questions and get to know the person you may work with. If you have a good rapport with one another, your interview should become less of a test and more of a discussion of the ways your business can grow and expand.
Questions you may want to ask include:
• What is the cost? Do they charge by the hour, or do they have a flat fee?
• Do they have a team? Some CPAs work by themselves, while others have partners or staff. If they have a team, you’ll want to know their qualifications.
• What’s their availability and typical turnaround time? How quickly can they get back to you if questions come up? How much of their time will you get?
• How long have they worked as a CPA? Are you their first client or have they worked with hundreds of clients like you?
• Can they provide references? Even if you became acquainted with your CPA from a friend, it’s never a bad idea to get more references if you can.
• Will they represent you during an IRS audit? Having a professional explain your finances to the IRS can be a huge weight off your shoulders should you ever be audited.
• What type of services can they offer? It’s possible they can help you with something you haven’t thought of. Get a full rundown of everything they do — you may end up hiring them for additional services that can help you run your company.
The Takeaway
Finding an accountant for your small business can be a huge weight off your shoulders and allow you to focus more on the business side of things. Just make sure to do your research and due diligence to ensure you find a CPA that fits your company’s needs and future goals.
If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.
FAQ
Is a CPA worth it for a small business?
Yes, a CPA (certified public accountant) can be invaluable for small businesses. They provide expertise in tax planning, financial reporting, and compliance. This can help ensure your business meets regulatory standards and avoids costly errors. CPAs can also offer strategic advice on managing expenses, optimizing cash flow, and scaling operations. While hiring a CPA is an investment, their insights can help you make informed financial decisions that could allow you to save money in the long run.
How to find the right CPA for your business?
To find the right CPA (certified public accountant), you might start by asking for recommendations from colleagues, other small businesses in your community, and any connections you have with local professional organizations (like the Chamber of Commerce or Rotary Club). You might even be able to get a referral to a good CPA from your bank or realtor. Once you have a list of candidates, it’s a good idea to interview each CPA to assess their expertise, communication style, and fees. You’ll want to be sure they understand your business goals and will be a good fit with your company.
What type of accountant is best for a small business?
For small businesses, a CPA (certified public accountant) or small business accountant with experience in your industry is ideal. They should offer services tailored to your needs, such as bookkeeping, tax preparation, and financial strategy. A CPA can be a good choice if you need guidance on complex tax laws, regulatory compliance, or business growth planning. If your needs are basic, on the other hand, a general accountant or bookkeeper might be sufficient. Ultimately, the best choice will depend on your business size, complexity, and long-term financial goals.
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