Benefits of Hiring a CPA
As with any business investment or expense, you want to make sure you’re getting what you’re paying for. The same rings true with an accountant or CPA.
Most small business owners will tell you that they only talk to their accountant once a year—at tax time. They send them the documents requested to prepare a tax return, the client signs, and they won’t hear from them until the same time the next year.
Each accounting firm can focus on different things. Some firms perform audits. Others strictly produce a product (i.e. a financial statement or tax return). Others specialize in a certain niche. It is important to find an accountant who is looking for clients like you and wants to foster the kind of relationship that you want. If the understanding of expectations on both side of the relationship are missing, the relationship will be hard.
Now, the benefits of having a good CPA:
1) Tax Advice
This can encompass many things when it comes to small business. Sometimes these questions are simply, “What can I deduct.” Other times they are more detailed and require more planning or strategy. Nevertheless, it’s important to have someone you trust who is a phone call away who knows your business and dedicated to helping you navigate the business world.
2) Structuring Your Business
A huge benefit to having a professional accountant is the knowledge they have about how to help you save on taxes. This includes whether you’re benefitting from the structure of your business, if it could be more of a benefit to be structured a different way. To explain the difference between C-Corps, S-Corps, LLC, Sole Proprietors…their expertise and knowledge is the biggest benefit to having them in your back pocket. It’s not expected that you, as a business owner, know everything about taxes and accounting…that’s their job! They can educate you to know as little or as much as you’d like!
3) Tax Return Preparation
Once a year conversations with a tax accountant is not near enough interaction for them to truly understand the ins and outs of your business and be able to offer the best tax advice. Tax preparation is just that, it’s preparing the tax return and making sure everything is correct on the return as reported. The “As Reported,” portion of that statement is the most important. The tax return will reflect what the accountant puts on it. It’s all the planning that has gone into preparing that return and getting the information correct behind the tax return that makes this step important. This is one of the biggest benefits of having a good accountant on your team.
4) Budgets
Do you have a budget for your business? Do you know how much you have to spend on advertising for the year? How about continuing education? If you’re flying by the seat of your pants and simply watching the bank account to know how your business is profiting, you could benefit from a CPA. Setting up a business budget is important. A budget is a plan. A plan for where your money is going to go. Without any kind of financial statements, it’s impossible to know where all of your money is going and how you’re spending it. An educated guess is possible, but seeing it in black and white—on paper is a game changer. A good accountant can help you analyze the numbers, see where you’re overspending, where you’re making money, and how to move forward to have a more profitable business.
5) Retirement Planning
Most of us don’t want to work for the rest of our lives. Finding a CPA who can help with the budget, the tax planning, the financials, etc can also lead to finding where the retirement money is going to come from. Retirement is coming—hopefully for all of us. It does take planning though.
As a business owner, there are retirement accounts with tax benefits to help you set aside money for retirement. A good CPA, who is working with your interest in mind will have these conversations with you. Find out what your long-term plans are, where you want to be, and help you navigate those waters.
6) Selling a Business
When it’s time to step away from the business, a CPA can play a huge role in deciding what tax implications there are and strategize the best exit strategy. Again, here you are paying for their knowledge and expertise in this field.
7) Representation with the IRS
CPAs can also represent you before the IRS. Professional accountants have priority with the IRS, and can speak with representatives on your behalf, write letters, and interpret the correspondence you receive. Having someone on your side when it comes to dealing with the IRS can be a stress relief in itself.
Why Core Group?
There is a laundry list of benefits I could list as to the benefits of hiring a CPA. That being said, like mentioned in the beginning of this blog, you have to find a CPA that encompasses what you want to do with your business. If it’s to lower taxes while growing profitably, then you probably don’t want to find a CPA that is strictly going to product a tax return in March or April.
If you want someone that is going to give you tax planning, financial reports, tax preparation, and everything else listed in this column—find a CPA that encompasses all of those.
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