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Why You Should Hire a CPA for your Small Business

by | Jul 1, 2024 | 2024, Accounting, Small Business, Tax planning, Taxes | 0 comments

Every small business owner eventually becomes concerned about their company’s tax ramifications, as well as the need to manage accounting and other demands. Attempting to manage these responsibilities alone can result in a great deal of inefficiency and disarray. As a result, many businesses engage a certified public accountant (CPA) to conduct such duties on their behalf.

What Is a CPA?
A CPA, or certified public accountant, is a highly competent financial professional who is licensed to provide accounting services to the general public. Licensure criteria includes passing the stringent Uniform CPA Exam, meeting further state requirements, and having a bachelor’s degree with at least 150 credits and one to two years of public accounting job experience. CPAs assist business owners with managing their money, including taxes and government filings, and they also give solid financial advice.

CPA vs. Accountant vs. Bookkeeper [Compared]

  Bookkeeper Accountant CPA
Specialist for Keeping and maintaining accounting records Analyzing financial records to get projections and budgets Financial advising, auditing and other duties that can only be performed by a licensed accountant
Minimum education requirements High school diploma A bachelor’s degree A bachelor’s degree, work experience and requirement to pass Uniform CPA Exam
Main duties Maintain company’s general ledger, enter data, record and categorize transactions, process payroll, generate customer invoices and collect payments Review financial statements, file tax returns, create financial reports and offer actionable advice Create audit reports, have specialized tax knowledge and experience and work while subject to a strict code of ethics
Median annual wage $45,560 $77,250 $78,947
Analyze financial records No Yes Yes
Offer financial advice No Yes Yes
Prepare and review financial statements No Yes Yes
Represent you before the Internal Revenue Service (IRS) No No Yes

 

Bookkeepers monitor all financial transactions within a company to ensure that everything is appropriately accounted for at all times.

An accountant manages a company’s books and records, ensuring that they are organized and up to date so that clients may make educated tax decisions. They are not state-licensed, but rather governed by their professional bodies. CPAs, on the other hand, provide accounting services to businesses and are licensed by the state in which they practice.

Reasons To Use a CPA

CPAs are knowledgeable specialists who can assist you with various elements of your business, such as reviewing financial accounts and offering unbiased advice. You should hire a CPA for:

  • Manage your funds: A CPA can assist you with your finances by advising you on how to set up and organize your business, as well as prepare for the future. They understand how to effectively prepare for growth in order to reduce risk and maximize revenues.
  • Plan your taxes: Taxes are tough, especially when you’re first starting off. It is very uncommon for small firms to get tripped up by their own blunders or a lack of awareness about tax regulations, resulting in them paying more than necessary. Hiring a CPA means you don’t have to worry about tax preparation since they can guide you through the complex tax filing procedure.
  • Prepare complete financial statements: CPAs can examine the impact of certain costs and deductions, such as depreciation or amortization, on your company’s income statement. They will also be able to assess how much money you may save by lowering your tax liability, as well as assist you in filing a tax extension. They ensure that all legal obligations have been fulfilled, such as timely filing of tax returns or payment of any outstanding payroll taxes when they become due.
  • Represent you before the IRS: In the case of an IRS audit, you should retain a CPA to assist you in defending it, since they are the only competent professionals for the job.

When Do You Need To Hire a CPA?

As a small company owner, you may need the services of a CPA if you are new to the business and need assistance selecting and structuring your business structure, or if you do not have the time or resources to deal with taxes on your own. If you’ve been in company for a while, a CPA’s knowledge and talents will help you manage complex tax circumstances and stay aware and comply with the law.

Why You Should Outsource to an Experienced CPA

Outsourcing your projects to qualified tax professionals or CPAs is one of the most effective strategies to ensure that your company’s accounting requirements are satisfied. They can assist you with all parts of accounting, including cash flow management, company planning and budgeting, and filing tax returns for small enterprises.

The BLS does not record CPA pay individually, but its Accountants and Auditors report shows that the lowest 10% earned less than $47,970 and the top 10% earned more than $128,970. Indeed reports an average base income of $78,947, but some estimate a CPA compensation of up to $147,000 for manager jobs.

Who it’s ideal for: If you’re unclear about how to manage accounting responsibilities like payroll taxes or bookkeeping, it’s preferable to consult with a professional who can give assistance based on their knowledge as well as your own.

Pros Cons
  • They can help you with your taxes and ensure they are done right
  • Hiring a CPA will help you make better financial decisions and avoid costly mistakes
  • Having someone else handle the workload allows you to set aside more time for other important tasks
  • They will be able to help you better manage your cash flow by keeping track of expenses and revenue so that they don’t get out of hand
  • They may not know the company’s business model or culture, which can be problematic if you want them to work with your team
  • Outsourcing can be costly. You may have trouble finding someone who will work within your budget constraints. Some professionals charge an hourly rate while others charge a flat fee based on their experience level

 

Bottom Line

If you’re ready to take the next step or start your own business, your partners at PSA CPA can provide invaluable guidance and assist you in organizing it. For further information, please call 301-879-0609 or email contact@psacpa.com.

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