Sometimes business owners try to do it all by themselves thinking that it could help to keep the budget low. As business owners we all can relate to “keeping it on a budget”. However, there are circumstances when it is more beneficial to incur additional expenses that prove to be a more efficient use of human resources; one example is in the case when we need the services of a licensed CPA.
Do I need to hire a CPA?
This is a common question most business owners ask themselves. Consider that hiring the services of a licensed Certified Public Accountant is a way to protect your assets and investments and to face audits if they ever happen, it brings multiple benefits to the business. Here we share five reasons why to hire a licensed CPA
- Power of Attorney for Tax Authorities:
A Certified Public Accountant is one of the few licensed professionals that can represent a client with the tax agencies. This takes stress away from the client since copies of tax notices or tax bills are sent to both the taxpayer and the CPA in order to timely address and explain an issue. Additionally, a Power of Attorney (POA) gives permission to the tax agency to discuss and fix the taxpayer’s account, avoiding the taxpayer to call or write letters, the CPA can do that for you to resolve tax matters only.
- Provide Analysis of Financial Statements:
Certified Public Accountants are the ONLY licensed accountants that can issue Certified Financial Statements most commonly requested by financial institutions for credit and risk analysis. Keeping updated accurate balances in financial reports is a must for every successful business, and a good bookkeeper can help with the basic bookkeeping. However, providing a thorough analysis and possible adjustments of financial statements is something that you should request from a licensed Certified Public Accountant. Having a Financial statement analysis performed has its advantages; to read, compare, and interpret the data through quantitative analysis provides invaluable information for decision making. To start your own analysis, compare last year’s financial report with this year’s, highlight the differences, and research them. Also, note your company’s percentages of labor, rent, gross profit related to revenue and compare with your industry’s ratios.
- Prepare and File Tax Returns:
Chances are that some of you had filed tax returns on your own to later realize you have missed deductions or tax-credits. Or even worse, you have completed the process and had missed to include relevant information to later receive from the Internal Revenue Service (IRS) a tax bill with penalties and/or late fees for a mistake that could have been avoided. The knowledge of tax law is part of the CPA licensing requirements. A licensed CPA should prepare your taxes based on the tax law updates and procuring the best benefit to the clients. Most CPAs prefer to file on time and avoid time extensions, if possible, and of course avoid the client from making late tax payments. Additionally, most CPAs will do all they can to help you avoid future audits from the tax authorities, and can best warn you of sensitive audit pitfalls.
- Starting a Business Venture:
It is important to choose the right business structure. One may not clearly be better than the other, but depending on your business structure and practices, you may determine which structure will be most advantageous for your business venture. The legal structure chosen will impact your personal legal and financial liability, how much you may pay in taxes, the amount of paperwork your business is required file, and it may possibly impact your ability to raise money. A CPA can guide you when starting a new business, after you speak to your corporate attorney, to make timely tax elections, accounting, so your business structure starts off correctly.
- Managing Multiples Sources of Income:
It could be a challenge to effectively manage multiple sources of income; however, proper diversification of your assets could be a strategy to plan wealth and reduce risk. Foreign sources of income or assets may have more declarations required, as opposed to U.S. sources of income. Additionally, if you earn income in various states, you may need to file and pay taxes in the state of earnings made. Lastly, various types of income are taxes at different rates by different agencies of the federal, state, county and city tax authorities. The best road to follow to research the tax law that specifically applies to your case and seeks the advice of professionals with experience.
- Business Growth Consulting:
Keep in mind the value of your time as business owner to focus issues that require their business expertise, which may save money, reduce significant cost, and increase earnings. The investment you make in an good licensed accountant, gives you a financial coach to help you focus on the growth your business, save taxes, possibly save on significant operating costs from business analysis, and literally help you find the proper instruments for retirement savings, and prepare a strategy to sell or transfer the business.
Two things to remember, most business owner’s expertise is not accounting, and all numbers start with good bookkeeping. “Do-It-Yourself” accounting may not save you time and money if you do not have the proper employee(s), software, process or supervision of accounting. Your CPA and your accounting department should be able to work with each other to best balance the proper roles and responsibilities between all offices, for a reasonable cost, without sacrificing tax compliance accounting procedures.
A licensed CPA can advise and watch out for your tax bill or notices, prepare your taxes, analyze your financial statements, manage your business, help plan your retirement, help protect your family and help to plan to sell you business. Hire a licensed Certified Public Account to ensure you are getting proper advice and saving some time and money.
Grow your business. Let the experts at Rosillo & Associates, CPA help.