As a small business owner, balancing the workload can be difficult.
You may have already taken steps to relieve some of the burden and have outsourced a bookkeeper or are using software such as an accounting app. Both of these are quick and easy options, but you may still find yourself struggling with staying on top of new regulatory changes, tax preparation, financial planning, payroll – and more.
Is it time for your small business to hire a CPA or Accountant?
The Difference Between a Bookkeeper, Accountant, and a CPA
The titles bookkeeper, accountant, and CPA are often used interchangeably in today’s business world, but the roles are considerably different.
Knowing the difference between these roles, and what the specific benefits are for your business needs, will help you answer the question “Is it time for your small business to hire a CPA or accountant?”
Bookkeeper
A bookkeeper typically performs basic day-to-day tasks, which usually includes accounts payable and receivables (inputting and tracking expense and income transactions), collections (collecting customer payments), and preparing reports for management.
Bookkeepers often gather employee timesheets, but a “full-charge” bookkeeper may also be responsible for payroll and filing routine payroll taxes, as well as balancing bank statements.
Bookkeepers typically reach out to the company CPA or accountant for recommendations, and in turn, bookkeepers receive feedback and recordkeeping guidance from the CPA or accountant.
A “good” bookkeeper will be an accurate one, but do you need a resource that can break the resulting statements and reports down and weigh the financial health of your business? Consider hiring an accountant or CPA.
“Creativity is great – but not in accounting.” – Charles Scott
Accountant
An individual on social media asked why many small businesses hire accountants to do their taxes. We agree with the anonymous answer, “Because the cost of mistakes is far higher than the cost of an accountant to do them.”
The baseline role of an accountant is to manage all accounting transactions. This includes financial reports, preparing tax returns, and ensuring that taxes are paid properly and on time. An accountant will also evaluate financial operations to verify and recommend best practices and identify any problem areas and will recommend specific solutions.
Some of the “full charge” duties that bookkeepers have, such as reconciling bank statements, can spill over into an accountant’s role.
Overall, an accountant helps a business keep their clients in strong financial standing. As a business owner, you want this.
It is important to note that most online apps offer a template-based accounting system. The person responsible for inputting the financial information (accounting clerk, bookkeeper, business owner, etc.) can set up the chart of accounts, link to business bank accounts, and produce basic financial statements – profit and loss, balance sheet, and cash flow. These reports can be utilized for tax reporting purposes, however, without the involvement of an accountant, accuracy can fall to the wayside.
Without the accountant, financial numbers practically mean nothing! Consider hiring an accountant.
Certified Public Accountant (CPA)
A CPA is an accountant who has been certified by a state examining board and has met the state’s legal requirements. CPAs are required to hold a bachelor’s degree in business administration, finance, or accounting, and must pass a rigorous Uniform CPA Exam to receive certification.
CPAs, unlike accountants, are authorized to handle an audit and represent clients before the IRS.
In our great state of Texas, CPAs are required to obtain 120 hours of continuing education every 3 years and must report their progress to the state certifying board every year. CPAs certified in Texas must also obtain 4 hours of ethics courses every 2 years. This is NOT a sign me up, certify me, and let me just stroll along with no new knowledge under-my-belt type of career.
Do you need a knowledgeable and certified person who can handle your taxes and financial records with more complexity? Do you want a professional that can step in when (notice I did not say “if”) the IRS audits your business? Consider a CPA.
Beyond the Basic Accountant or CPA Role
Accountants or CPAs can help with much more than what is typically listed on a CPA job description.
What are Your Business Goals? CPAs Can Help with Growth and Change
You may have decided to remain a very small business with no employees. There is nothing wrong with being a solopreneur, but remember that operating any business requires focus, planning, and resources. Do you have the time and resources to keep up with accounting, tax law, tax preparation, and financial planning? Typically, you cannot do it all – unless you never want to sleep.
You may have specific business growth plans in mind. But you may not know how to maximize your revenue, profit, and cash flow to make it work for you. A CPA will assist you with your growth plans and proposed changes.
CPAs are instrumental in preparing business proposals and plans that will help you grow your business. CPAs provide consulting that will help you analyze financial moves and verify any tax implications.
CPAs not only monitor your total business assets, but their role includes detailed knowledge of credits, debits, profits, and losses. A CPAs role includes comparing monthly, quarterly, and annual financial information, and giving the business owner, or appointed manager, advice on how to improve monetary resources.
CPAs save you money and help you avoid major financial and tax headaches.
Can you go without this? Is it time for your small business to hire a CPA or an accountant?
We Are Ready to Serve Your Business
Here at Heath B Stafford, CPA, we offer:
- Tax Services
- Tax Planning
- Tax Preparation
- Flat Fee Accounting
- Accounting Services
- Franchise Services
Our full-service, remote accounting, bookkeeping, and financial services are at your fingertips, so you can confidently focus on business growth without headaches.
Before hiring a bookkeeper or paying for an online app, know that we are in the business of helping businesses confidently grow…we are accessible, but the difference is that we are here to help you grow your business to the next level.
Schedule an Intro Meeting.