Would you try to replace your own transmission? Operate on yourself? Install your own septic system? Some of you would and could do those things yourself, but most of us would hire someone who’s an expert at car repair, medicine or plumbing. Every day small business owners tell me they don’t need a Certified Public Accountant (CPA) to do their taxes. After all, it’s “just numbers,” right? Well, not exactly.
A CPA is a trusted financial advisor who helps individuals, businesses, and other organizations plan and reach their financial goals. A CPA is an expert in business, budgets, money and taxes. There’s a time and a place where it’s better to use an expert than to try to do things yourself. We all know when to turn to other experts for advice. The time to turn to a CPA is anytime you have financial questions, but especially when it’s time to do your annual business or personal taxes.
For instance, I will gladly add oil, or fluids to my car, but when it comes time to make sure the brakes are working, I take my car to an expert. I will put a bandaid on a cut, or buy over-the-counter medicine when I have a cold, but when I get really sick, I go to a specialist, a doctor who knows what to do. I can take care of small auto problems because my mechanic showed me how. I can manage minor medical emergencies because my doctor showed me how. I can even take care of some of my plumbing issues, because my plumber showed me what tools and skills I’d need to unclog a toilet or sink, or how to shut off my main water valve. As a CPA I do the same thing with my customers — I give them the tools they need to manage the day-to-day financial aspect of their business, and I show them how to do most of their basic bookkeeping tasks themselves. But, like any expert, when a problem or challenge comes up, I’m there to handle it for my customers.
If you’re a small business owner, you specialize in what you do. Wouldn’t you rather your customers use your expert services rather than try to fix, make or do something themselves? You know it saves them time, money and frustration to come to you first. That’s why working with a CPA is a smart choice for small businesses and individuals. A CPA designation is one of the most widely recognized and highly trusted professional financial designations in the business world. CPAs are different from other finance professionals because they not only undergo very tough qualification and licensing requirements, they must keep that license up through continuing education programs every year as well.
There are other advantages of working with a CPA:
- They can teach you what you need to know about keeping receipts and tracking expenses.
- Practicing CPAs must be licensed through their state. This means they are up-to-speed on new laws and are invested in staying current on tax laws.
- CPAs are “in it for the long haul.” Because becoming certified and licensed is a long, difficult career path, most CPAs stay in the business long after a tax preparer who only spends two to four weeks learning how to prepare a tax return.
- CPAs are in business year round. They stay open 12 months out of the year, unlike most tax preparation services who are only open January through April.
- CPAs hold onto your tax records just like a doctor holds onto your medical records. If you ever need that information, you know where to find it.
- CPA’s do more than crunch numbers; they’re expert advisors on a variety of financial decisions you’ll have to make as a business owner, or an individual too.
- They know the federal and state laws regarding your taxes and how not to break them
- They know what you don’t know you don’t know (usually the stuff that can get you in serious trouble).
- They understand the challenges of small businesses because they work with them every day.
- When you hire a CPA, you also get access (through them) to their vast network of experts and advice.
- CPAs are not book keepers or tax preparers, although they can and do perform those services. They’re more. They are business and financial strategists who help you chart and plan your business. You can turn to a CPAs for tax and financial planning services, investment advice, estate planning, and more.
The pitfalls of not working with a CPA:
- Studies show that on average people who do their own taxes pay more in taxes than someone who uses a CPA.
- A CPA is more likely to spot fraud, or an employee embezzling money from you than you are
- Taxes are complicated, and laws change annually, without a CPA’s knowledge of old and new laws you can quickly run afoul of the IRS and get hit with penalties and fines you could have avoided.
- IRS penalties are high, and if you do your own taxes and make a mistake, you’re the one who has to pay for it.
- Many business owners fail to understand how to truly separate business accounts from personal accounts, leading them into serious problems, fines, and fees with the IRS.
- You’re likely to get the wrong kind of credit or loan. A CPA can help you find and decide on the best rates — since banks aren’t the only ones who lend money.
There are a lot of reasons to use a CPA — especially if you’re serious about your financial future, or your small business. If you are ready to gain a better understanding of your business and organize your financial information, click here to see how mysimpleaccountant can help.