When Should You Hire a CPA?
There are critical times when your small business requires the services of a CPA (Certified Public Accountant), from selecting a company structure that allows you to save the most money on taxes to offering advice on a significant business move.
As a small business owner, you may find it challenging to determine when to outsource tasks and when to manage them yourself. This is especially true if you’re looking for a certified public accountant (CPA), if you’ve recently established your business or if it’s grown beyond expectations.
While you can easily handle day-to-day accounting on your own, especially if you have decent accounting software or a bookkeeper, there are times when the knowledge of a CPA may help you make wise business decisions, avoid costly mistakes, and save you time.
When to Hire a CPA
#1 When Your Business is Starting Off
Accountants can assist a small business at different stages of growth. To get your business off to a good financial start you need to consult a CPA. Your accounting and tax reporting responsibilities will be determined by how you register and run your business for the rest of your career.
A CPA may evaluate your business plan, ensure its financial viability, and assist you in preparing a budget to carry it out. If you intend to manage your day-to-day bookkeeping at first, a CPA will also point you in the direction of the best software choices for your specific business plan.
#2 When Filing Taxes or Being Audited
Whether you run a sole proprietorship or a corporation it is a given fact that tax season is a business burden. It is full of risky and expensive mistakes when done incorrectly. Long before the deadline for filing, business owners need to have a second pair of eyes to review their tax forms.
You can assign your tax-related tasks to an accountant, tax preparer, or a CPA who can perform both of these functions in order to spare yourself the hassle. CPAs handle both personal and business taxes, and they are skilled at navigating tax season, reducing your responsibilities, and protecting your company in the event of an error or tax audit. Also, it is best to hire an accountant before an audit happens, especially if you can find one who would provide audit insurance.
It is essential to be reminded that not all accountants prepare taxes so before outsourcing a professional be sure to find out whether tax services and protections are provided.
#3 When You Apply for a Loan, Grant, or Other Funding
Even for business owners with a track record of profitable operations, applying for a business loan and other forms of funding can be difficult. Establishing credibility is the first challenge, which is particularly challenging for new firms and startups. However, a CPA can help you in staying on top of things and navigate the rough waters.
They will assist you in evaluating various strategies for establishing business credit and directing you to low-risk options. Even better, a CPA can help you in narrowing the field of loan options to those that are best suited to your budget such as choosing between a microloan or a standard term loan.
#4 When You Require Assistance with Financial Planning and Analysis
Planning and analysis are two areas where accountants thrive. One of the main advantages of employing an accountant is having access to their depth of financial knowledge.
This is especially true if you work with a CPA who has experience in your field or industry. You can involve them in any financial decision or goal, such as buying property, merging with a rival business, or cutting operating expenses.
#5 When You Need to Save Time
Managing your time can be challenging, especially when you’re facing many deadlines, clients, and complex client tasks.
If daily duties like tracking expenses, verifying transactions, data entry or processing receipts are taking up your time, a bookkeeper could be the right fit for the job. However, if you require a front-line professional to analyze your company’s operations, trends, costs, and revenue on a regular basis, it may be time to hire a CPA.
Time is an important resource, and hiring an accountant may simply come down to how much time your business can save.
The Bottom Line
As you can see, accountants can assist you at every level of your company’s growth. The right accountant should make your life easier so you can focus on what you love.
There is no exact science to knowing when to hire an accountant. However, there are some clear cases where it makes sense to use their skill set. When starting or growing your business, creating a financial plan, evaluating business reports, or applying for funding, consult with an accountant.
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