Many small business owners believe that a Certified Public Accountant (CPA) is not a necessity due to the fact that they are too small, can handle the finances themselves, have a part-time bookkeeper to handle the accounting, etc. In reality, small businesses are those that benefit the most from the expertise of a CPA.Following are just a few of the areas in which a CPA can be beneficial to small business owners.
- Trusted advisor – A CPA can help the small business owner navigate the myriad of regulations and requirements from not only a federal perspective but state and local regulations as well. They may be subject to sales and/or use tax, Washington State Department of Revenue excise tax return, payroll taxes (at the federal, state and local levels), or other regulatory requirements. In addition, as a business grows and evolves, a CPA can act as a strategy advisor by creating or updating the business plan, budgets and forecasts on a periodic basis. CPAs can work with attorneys in determining the most appropriate form of business to set up, bankers in obtaining financing, as well as the government offices that regulate small business in the country and state.
- Business and industry expertise – A small business owner’s scarcest resource is time. Small business owners cannot realistically be an expert at everything. They should seek out a CPA with experience or expertise in their industry and leave their finances to the expert. This allows them to focus on running and growing their business. CPAs can provide knowledge and experience they have obtained from working with other clients in the same industry. They can provide benchmark statistics, key performance indicators, and dashboards. to help the business owner analyze their business and avoid the mistakes others have made before them.
- Accounting and recordkeeping best practices – CPAs can assist small business owners in selecting the appropriate accounting and recordkeeping systems that best fit their needs. Using an accounting system that their tax preparer is familiar with will make tax preparation easier at year end. In addition, the CPA can assist the business owner with setting up their chart of accounts in order to provide the most appropriate financial information for analyzing their overall financial position, cash flow monitoring, forecasting, and budgeting. CPAs can also monitor and provide input into the day to day accounting functions performed by bookkeepers and data entry clerks to ensure the accuracy of financial records.
- Referral source – A CPA can be a small business owner’s best and most reliable referral source. CPAs work with a variety of bankers, payroll companies, insurance agencies, attorneys, human resource and benefits specialists. They can recommend the best fit for the business and industry and can act as a liaison between the service and the business owner to ensure the best interests of the business are kept in mind.
- Income taxes – Most small business owners do enlist the services of a CPA for preparation of income tax returns on an annual basis. However, constant contact and involvement with your CPA all year long will ensure a smoother and more accurate income tax return process. In addition, tax planning can be done throughout the year as opposed to after the year has ended when opportunities are less available. When your CPA is intimately involved in your business they are better able to identify and implement income tax reduction strategies, take advantage of all credits available and analyze decisions from a tax perspective as well as a business perspective.
Certified public accountants can be a tremendous resource to any small business, from those just beginning operations to established enterprises. In the long run, a close working relationship with your CPA will help to ensure the success of your business and most likely save the business money in the long run.
Contact Lake Stevens Tax Service or call us at (425) 334-8138 with any questions about how a financial advisor can help grow your small business.
