Small business owners must, at a minimum, keep track of the money. They have to make certain the financial transactions are up to date and accurate. However, long term growth depends on planning and strategizing. One of the best ways to do this is to work with a CPA. There are also cases when it isn’t absolutely necessary, and you may be able to get by with a bookkeeper. Here are four signs your business needs to work with a CPA.
It isn’t counterproductive to hire a CPA when you’re overspending. If you’re spending too much every month, then it is essential to bring in an experienced outsider to review your finances. They’ll be able to tell you how to streamline costs without cutting into the meat of your operations. They’ll be able to recommend a better spending plan so you can stay in the black.
A CPA can forecast your income and spending and warn you of potential cash flow problems in the future. Then you can better plan your spending so you don’t overspend one month. You’ll have set aside money to pay for the purchase instead of borrowing money to pay for it.
Your Finances Are Disorganized
If your accounting is haphazard and your books are disorganized, you need to bring in an accountant. They’ll be able to organize your records and set up systems so you can maintain it. Or they can maintain it for you, tracking income and outgoings. It is probably worth it to let someone else keep the company’s books while you focus on other, more important areas.
You Aren’t Sure How to Grow Your Business
A CPA can not only determine your profit margin but break down income and expenses by product, service or store. Then you know which items are the most profitable and which are costing you the most money. You may decide to cut products that aren’t worth the effort and focus on those that generate the most revenue or have the highest profit margin.
A CPA can also tell you where your greatest opportunities for growth are, such as those stores or products that are seeing the greatest increase in sales and/or profitability. They can help you plan for the future, budgeting for future growth based on the likely income. This minimizes the risk you take when you expand.
You should understand the difference between a CPA and a bookkeeper. A bookkeeper keeps your books, but a CPA has more advanced education and expertise. When hiring a CPA, you have to distinguish between the accountants who are glorified bookkeepers and those who can come up with a good financial strategy for your business.
You’re Uncertain How to Handle Your Taxes
You can’t afford to miss out on tax deductions. Yet tax deductions and the rules regarding them are confusing. A CPA can review your books and determine the right tax deductions to claim. Furthermore, they’ll be able to submit the necessary paperwork to defend your claims. You must have a CPA with you when you’re hit with larger than expected tax bills or getting audited. A certified public accountant can help you plan for your next tax bill and set aside enough money to pay for it, whereas a bookkeeper can only total up what you spent and, at best, submit a tax return on your behalf.
A CPA can be of great benefit, whether your business is drowning in red or uncertain of the best path forward. They’re essential when you’re doing tax planning or gaining control of your finances.
James Daniels is a freelance writer, business enthusiast, a bit of a tech buff, and an overall geek. He is also an avid reader, who can while away hours reading and knowing about the latest gadgets and tech, whilst offering views and opinions on these topics.