Accounting is such an important part of running a business. There are bills to pay, accounts receivable to collect, and quarterly taxes to estimate. If you’re a business owner who just wants to kill something and drag it home—in other words, grow your business—all that stuff can sometimes just get in the way.
But without good accounting, how will you know if you’re making a profit? If you’re buying a T-shirt for $5 and selling it for $10, the math is easy. But the more success you have, the more complicated it gets. There’s payroll, sales tax, insurance and a bunch of other things that all need to be accounted for. And this is where a Certified Public Accountant (“CPA” to the cool kids) can help!
So, what does a CPA do exactly? And how can they help your business?
What Is a CPA?
An accountant is a professional who takes care of all of the boring—um, essential—math tasks that go along with running a business. They do bookkeeping, financial planning, and prepare financial documents like tax returns and profit-and-loss statements. A Certified Public Accountant (CPA) is an accountant who also meets the educational and experience requirements of the state they live in and has passed that state’s Uniform CPA Exam.
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In other words, all CPAs are accountants but not all accountants are CPAs. And while a CPA can’t make business decisions for you—after all, this is your business, you are the boss, and if your taxes don’t get filed, you will be held responsible—a CPA can offer good advice and help you make the right decisions.
What Does a CPA Do?
First things first, CPAs can prepare and file your business’s federal, state and/or local tax returns—that’s their bread and butter. Beyond just filing returns, CPAs can provide four basic services for a business:
1. Tax Advice and Planning
If there’s a problem or an audit, CPAs can represent you in front of the IRS or answer any questions a state or local tax board might have. They can also give you advice to help minimize your tax burden throughout the year, which helps ensure there won’t be an audit or any questions from the state or local authorities.
2. Audit and Assurance Services
A CPA audit is not the same as getting audited by the IRS. In fact, having a CPA audit your business’s finances and economic data is a great way to avoid getting called in front of the Spanish Inquis . . . sorry, we mean the IRS. CPAs will give you an unbiased report and make sure everything is up to snuff.
Assurance services is just a fancy way of saying that a CPA gathers all of the relevant info that a company’s decision-makers need—and assures that they understand it—so they can make good decisions for the business.
3. Management and Consulting
This one is often overlooked—a CPA can assist with the supervision or management of a company’s day-to-day financial operations and help provide strategic and long-range planning. This could include things like budgeting, cash management, financial planning, preparing financial statements for shareholders, coordinating risk management and insurance, providing investment advice and helping with estate planning. Whew!
4. Forensic Accounting
This is also called investigative accounting or fraud auditing. Your CPA will go through the books and sniff out any evidence of criminal conduct like embezzlement or tax evasion. In the unfortunate event that money is disappearing or you think a business partner is ripping you off, a CPA will help you get to the bottom of it.
Different Roles and Responsibilities of a CPA
In addition to those basic accounting functions, a CPA often fulfills other roles at a company. They are trusted advisors, of course, but they can also work as:
1. Payroll Administrators
Just ask your employees—payroll is a big deal—and it has lots of moving parts! A CPA will make sure your team is paid on time and that all payroll taxes, insurance and retirement withholdings are deducted correctly. Your CPA will also keep track of any expense reimbursements or profit-sharing disbursements.
Do you have accounts receivable that need collecting? Do you need invoices sent out? What about your vendors? Have they all been paid? A CPA is an excellent choice for making sure the bills get paid and the money that customers owe you actually makes it into the bank.
3. Long-Term Planners
Where does your company want to be in five years? Will you have the money available to get there? A CPA looks at your long-range financial goals and helps you figure out how much money you have, how much you’ll need, and how you’re going to get it. It’s your vision, and a CPA can help you execute that vision.
4. Tax Filer
As mentioned above, your CPA will prepare your tax return and, if necessary, get a filing extension. They can make sure your quarterly taxes are filed correctly and on time, keeping you from having to pay late payment penalties. You won’t have to worry about tax issues sneaking up on you.
Find the Right Accounting Professional for Your Business
If you’re looking for accounting services, whether it’s help with payroll, advice on the tax code, or help filing your taxes, our small-business tax Endorsed Local Providers (ELPs) are here to help!
Most small business owners spend anywhere from 21 to 120 hours every year on bookkeeping and taxes.1 We don’t need to tell you that’s time you could be spending doing what you do best—growing your business!
Our ELPs are professionals who live and work in your community full time and will have your back when you need them.