A certified public accountant, or CPA, is an expert in the field of public accounting who has passed a very difficult CPA Exam and is licensed by one of the 50 states to work. The designation ‘Certified Public Accountant’ is actually a designation given by the American Institute of Certified Public Accountants to distinguish those who have met the highest professional standards for the industry from other financial professionals. CPAs must complete several hours of continuing professional education every one to three years in order to remain licensed.
Are you a small business owner? A CPA can offer you and your business invaluable financial guidance and will likely become one of the most trusted individuals you do business with. Here are some of the most common ways that CPAs help small businesses.
Tax Preparation & Experience
CPAs most commonly work with small businesses to help them with their corporate tax needs. A CPA will help a small business document all possible deductions, abide by the latest tax laws, and prepare for potential audits in the future (or deal with a current audit).
Unless you have training and schooling in accounting, chances are that you aren’t very familiar with tax laws. You know to file your federal and state income taxes by April 15th every year and hope you receive a return instead of having to pay, but that’s it. When you own your own business, it automatically gets a lot more complicated. A CPA will be able to tell you all of the deadlines for taxes, as well as sales and use tax if it is applicable to your business. They are able to represent you in every step of the process and will make sure your taxes are taken care of adequately.
Budgeting & Business Planning
CPAs do much more than tax preparation for small businesses; they can also help small businesses write out a solid business plan. CPAs use their expertise to make financial projections and offer advice on choosing a business entity, negotiating leases, and setting up a bookkeeping system. A CPA can also offer valuable advice if you’re considering buying a business, selling your own business, or investing in a franchise. CPAs are especially valuable to growing businesses, as they handle the fine details of growth such as payroll, property tax, employee tax management, financial reporting, and more.
Your CPA will be able to help advise you through the rest of your financial decisions. If you have a hard time making or sticking to a budget, or you’re the kind of person that ignores their bank account and hopes it doesn’t turn into a dumpster fire, then a CPA will be able to help you get the help and order that you and your business desperately need.
Audit Assistance & Prevention
Though audits for small businesses are not particularly common, a tax audit can still happen to you and can be stressful, expensive, and time-consuming. Should your business be audited, a CPA can give you advice on navigating the audit process and ensure that you abide by all tax laws following an audit. This is also true for a variety of financial situations where your business must meet compliance of state or federal law, such as if you are entering a period of fundraising.
Even better than hiring a CPA when your business is audited is hiring one before an audit even happens. A CPA can help small businesses by creating a trail of documentation that would prove invaluable in the case of an audit. Some CPAs even offer audit insurance to small businesses.
Applying for a Loan
A CPA can help boost the chances of your business receiving a loan by giving you credibility, presenting facts and figures to back up your application, and answering any questions the bank might have about expenses and financial projections.