Does Your Small Business Need A CPA? Absolutely!

While many business owners wonder if their business is too small to need a certified accountant, the truth is that every business can benefit from the services of a skilled accountant. In fact, even freelancers or businesses with no employees at all would do well to make use of CPA services at least on an annual basis.

I Do My Own Books! What Do I Need an Accountant For?

One of the most common misconceptions among many business owners is that accountants and bookkeepers perform the same tasks. Nothing could be further from the truth! Your business can benefit from the services of a CPA even if you already have a bookkeeper or manage your business' finances on your own. Certified public accountants are here to help your business with the big stuff, not necessarily routine daily financial management. In other words, most small businesses really only need the help of an accountant in specific instances.

When is a CPA Helpful?

If you don't need an accountant to help you manage your day-to-day books, then when do you need one? That's a more complex question, but the general answer is that a professional accountant can help you during major financial events or when you need to do long-term financial planning for your business. Both of these situations may sound fairly vague, but that's because the specifics will vary a great deal depending on the industry that your business operates in and how large your business happens to be. As a general rule of thumb, most small business owners will want to consult with a CPA under the following circumstances:

  • In initial business formation
  • During tax preparation, both for final filing and quarterly estimates
  • Anytime large capital expenses are made, especially if the expense is financed
  • When the business' debt situation changes drastically, such as if a loan is refinanced
  • During major "negative" events, such as bankruptcy or IRS audits

These are concrete situations where an accountant is useful, and almost every business owner will want to consult with one during these times. While many small business owners ultimately choose to do their taxes themselves, meeting with an accountant for at least your first year of taxes is helpful just to get yourself started on the right foot. Additionally, having your tax papers reviewed every few years is a good idea to make sure that everything is in order.

What About Financial Planning?

Major financial events are the most important times to consult with a CPA, but it can be useful to speak with an accountant when planning for the future as well. While certified financial planners (CFPs) are commonly associated with this sort of planning, CPAs can help too. If you are considering taking out a loan or making a major capital expense in the next few months or year, then an accountant can help you to understand how this will affect your taxes for the coming help and advise you on the best options to minimize your tax burden.

More importantly, if you have been working with the same accountant, they will be familiar with your company's finances and can provide advice that is specific to your situation. They may also be able to find information in your records that you may have overlooked, which is likely to be helpful anytime your company is preparing for a major financial change.

Final Considerations

It can be tempting to handle all of business's financial details on your own, especially if your business is particularly small or if you do not have many employees. While this is certainly an option, hiring a CPA for consultations and preparation work a few times a year can potentially save you huge amounts of money over the long run. Not only will you be sure that your tax paperwork is being filed correctly, but you will have an advocate to help fight for you if you ever find yourself in a dispute with the IRS or a creditor. These advantages far outweigh the relatively small amount of money that might be saved by going it alone.