Does my small business need a CPA? With two-thirds of small business owners personally managing three or more vital areas of their operation at any given time, it’s no surprise that their finances take a back seat. Plus, 99.6% of 2018 Pennsylvania businesses are small businesses. That’s a lot of small business owners who potentially need help! Find out if you should be seeking out a CPA’s assistance today.
What is a Certified Public Accountant (CPA)?
CPAs are accountants who have passed a rigorous examination to receive their CPA license. They are subject to a code of ethics and are required to participate in annual ongoing education. CPAs not only handle complex accounting tasks and tax returns but analyze the bigger financial picture for businesses.
Many small businesses are unsure when to reach out and utilize a CPA’s services over other accounting options. Here are five key signs you need to consult a CPA about your small business.
1. You’re spending too much time on accounting.
We’ve all heard the saying, time is money. But it’s true! As a business owner, your time is incredibly valuable. It should be dedicated to what you do best inside your business. Also, if you aren’t a trained CPA, there’s a much higher chance of human error. Spending money on a professional frees up your time and gives you peace of mind that the job is done correctly.
2. Your business is growing.
As your business grows, paperwork grows, and financial calculations grow more complicated. Think back to where you started. How many employees have you hired? How much has your revenue increased? If you’ve grown, it may be time to outsource finances to a qualified professional.
3. You find tax season stressful.
Most people do, but small business owners have a lot on the line. CPAs know more about tax code than accountants and bookkeepers. Their licensing exam requires them to learn this knowledge. Many CPAs also participate in ongoing education to stay up-to-date with the ever-changing tax laws.
If something were to go wrong with your taxes and the IRS requested an audit, you’d be in much better shape if a CPA had done your tax returns. Their license allows them to fully represent you in front of the IRS. While an accountant can sign tax returns, the IRS considers them an unenrolled preparer. That means they cannot effectively represent you in this situation.
Here’s what to expect if you’re audited while represented by a CPA.
4. Your business and personal accounts are mixed.
Mixing business and personal finances is dangerous territory. We highly recommend setting up separate accounts. A separate business account can provide legal protection, accurate bookkeeping records, and are required for specific business entities. A CPA can help you unravel your accounts and set up your finances the correct way.
5. You don’t know important financial numbers, like gross & net revenue.
If you don’t know these numbers and don’t have access to regular analytical reports, how are you making important business decisions? If you delegate these financial reports and analytics to a professional CPA, you can ensure that you are well-informed. The CPA can help you understand these numbers and make wise decisions based on key metrics.
Still not sure if you need a CPA?
Take our FREE quiz, ‘Is it Time for a CPA?’ This quiz will score you based on your answers to important financial questions. Find out what your score is, and if you really need to consult a CPA about your business. Take the quiz now!
Still not sure if you need a CPA?
Take our FREE quiz, ‘Is it Time for a CPA?’ This quiz will score you based on your answers to important financial questions. Find out what your score is, and if you really need to consult a CPA about your business.
