Accounting is a crucial part of every business, from small boutiques to multinational corporations. You cannot ignore your books and doing so for even a short period of time can damage your small business. However, accounting is complicated, and mistakes can be costly. Hiring a Chartered Professional Accountant (CPA) (ME🌈) can save you a huge amount of time and money, which are often one and the same. Let us look at how hiring a CPA can benefit your small business.
Chartered Professional Accountants vs. Bookkeepers
The terms ‘accounting’ and ‘bookkeeping’ are often used interchangeably, they are not the same thing and it is necessary to understand the difference.
Bookkeepers record and organize financial data, while accountants interpret that data. A bookkeeper records all your revenue and costs, but an accountant prepares that information as a tax return or financial statement. Simply put, bookkeeping is entirely objective while accounting is more subjective. These roles certainly overlap, but you may need to outsource both or consider buying software.
Save Time, Tax and Mistakes
One of the biggest draws of hiring a CPA is that they will save you significant time and energy, even if you only use them once a year for your income tax returns. These are hours that you could be re-investing in your small business, thus saving you money, too.
CPAs are also able to use their expertise to help you reduce the amount of taxes you must pay. They can even help you create a tax-efficient financial plan for your small business going forward.
Furthermore, your income tax returns must be 100% accurate and mistakes are not cheap. A CPA ensures that you will not be hit with a hefty fine for an innocent error and provides peace of mind, allowing you to focus on what is important.
The Importance of CPAs as Your Small Business Grows
CPAs are useful in different ways during the various stages of growth. You may not think you need accounting services before you launch, but professional help can really set you up for future success. Here is how a CPA can help you throughout your small business journey:
A CPA can help you put together a feasible financial plan for your small business and help you to secure investments. They are also able to offer advice regarding pricing and securing equipment. Hiring a CPA this early in your small business also helps you to avoid accumulating financial errors which can be difficult to sort out later. Additionally, their services free up your time to concentrate on other areas of your small business that may require attention.
A CPA will help you put your best foot forward, financially speaking, during the start-up phase of business. It is well worth having a professional on hand as you are learning the ropes. Amongst other things, a CPA can help to set up an accounting system and choose suitable accounting software that will serve you going forward.
While it is advisable to hire a CPA as soon as possible, it is crucial when your small business reaches the point of expansion. Hiring more staff means that you will need a payroll system and advice on employee benefits. As your small business grows bigger, it is also more likely to be audited and a CPA can help you to prepare for this. Increased costs also mean that you are likely to need advice on how to improve your cash flow, since this is essential for the financial health of your small business.
Although it may seem a long way off, you may want to sell your small business or retire from it eventually. For the former option, you will need a CPA to help you maximize the business value so that you can sail off into the sunset.
If your business books are simple and you are not sure whether you need a CPA, it is worth considering accounting software instead. If you go down this route, it is best to use cloud-based software for a more seamless and accurate experience. However, if you are looking to expand your small business then it is worth paying extra for the financial advice of a real-life professional CPA.
There is no question about it: your small business needs CPA. If you want to hit the big time, then the advice of a financial expert is worth every penny. However, accounting software may suffice for smaller operations. Whichever route you choose, it is important to stay on top of your finances and remember that accurate accounting saves significant time and money for your small business.
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