A financial consultant and tax advisor are essential to the success of any business, especially new ones. The financial decisions made now reverberate for years to come, often for as long as the business operates. To be successful, a business needs to know exactly where its assets vs liabilities stand, have a comprehensive understanding of its operating income and maintain a strong cash flow.
A Certified Public Accountant (CPA) investigates the numbers and draws conclusions as to how profitability and cash flow can be enhanced over the long run.
Planning ahead also pays at tax time. Most businesses can afford to give very little extra cash to the IRS. Using a CPA ensures your tax preparation goes beyond simple calculations and produces a comprehensive plan for reducing tax liability.
Hiring a CPA Provides More Value Versus an Accountant
Accountants are financial and tax pros who understand and follow the Generally Accepted Accounting Principles, which are developed by the Financial Accounting Standards Board. Most accountants are good at fulfilling the basic accounting procedures, but they are not CPAs. CPAs pass state licensure exams that require them to possess additional advanced skills.
The CPA distinction shows business owners that their financial- and tax advisor has learned advanced tax preparation and financial analysis skills that most accountants lack. CPAs must pass a comprehensive test that lasts for several days. Part of this test focuses on current tax law and CPAs must re-certify they are current with tax code through continuing education. They must also re-certify their expertise with financial statements and analysis.
CPAs Are Tax Planning Experts
CPAs provide the best tax planning and preparation. They are taught the tiny details of the tax code and study changes each year. They are also able to assist with long-range planning that can cut taxes in the coming years.
An accountant can prepare and sign their clients’ tax returns, but the IRS classifies them as unenrolled preparers. As unenrolled preparers, they are barred from representing clients before the IRS. On the other hand, CPAs are enrolled preparers who provide direct representation at IRS audits. Having your return prepared by a CPA puts your business in a much stronger position with the IRS and gives you the peace of mind that you are covered in case of an audit.
You Need a Financial Statement for a Loan
Small businesses borrow billions of dollars each year. Lending provides key resources for small businesses, most of which could not get off the ground without access to credit. Over time, it’s likely additional loans will be needed, whether for a refinance, an expansion or new products. CPAs are experts at preparing financial statements and can help improve your presentation and fix any errors, greatly increasing the chances of approval.
Your Budget Is Falling Short
The business failure rate can certainly be intimidating, but by working with a CPA, you benefit from the financial planning that keeps budgets accurate, realistic and consistently on track. Most businesses fail as a result of running out of cash rather than a poor business model. A CPA can help keep cash flows healthy, so your business stays strong enough to achieve its goals and prosper.
The Business is in the Formation Phase
During the formation phase, business owners make critical decisions about how they set up their operations. Missteps cost precious cash flow down the line. The chances of success are greatly enhanced by choosing the best business structure, having a CPA analyze the business plan from a financial perspective and making the most-efficient decisions from inception.
A CPA can be a great help with the following:
• Analyzing, improving and finalizing a business plan
• Setting up advantageous bank accounts
• Complying with government regulations
• Choosing the most financially suitable location
• Gaining approval for the most advantageous financing
Running a business is always a challenge. It takes organization, intense focus and perseverance. Achieving success in core competencies often takes all the business owner’s time, leaving little opportunity to focus on the nitty-gritty of finances; however, the nitty-gritty financial decisions are often what keep businesses in the green.
Hiring a CPA takes care of the financial aspects of a business without taking valuable time and focus away from the core competencies that make a business great.
If you are starting a business or your business needs accounting and tax services, Tax Avenger Canton MI can help. Our CPA / accounting firm is dedicated and committed to providing exceptional service to our clients. Our services include business accounting and payroll services, individual and business tax preparation, tax problem resolutions and more! With over 18 years’ experience, our firm prides itself on the extensive international and local experience in accounting and taxation. Call us today to learn more with a Free Consultation!