A certified public accountant (CPA) is an asset for a small business owner, and not just at tax time. Entrepreneurs sometimes turn to DIY methods to save money and take an active hand in running their businesses, and there are many cases in which this can work out great. Accounting is not one of them.
Small business owners are not legally required to use a professional accountant, but the financial statements and advice they provide are essential for long-term success. When financial statements are required for loan applications, grants, and sometimes even job bids, you want to make sure they’re done right.
What is the difference between a CPA and an accountant?
Accountants do more than prepare and file taxes, and not all accountants are created equal. An accountant is a professional who follows established rules and principles to report on personal and business finances. A CPA is an accountant who has passed extra licensing examinations in their state.
Not all accountants are CPAs. On top of the financial know-how of regular accountants, CPAs tend to be more up-to-date on tax laws, more thorough in their financial analysis, and can represent small businesses who are being audited.
How do you choose the right CPA for your business?
Background and qualifications – There are many different kinds of accounting. Look into the backgrounds and qualifications of any candidates and make sure they practice the type of accounting you need. Have they worked with the businesses like yours?
Understanding and personal connection – Even in business, there’s nothing more personal than money. This isn’t a likeability contest. You’re not looking for your buddy. But you are looking for someone who will be with you for years. You need someone who communicates, listens, understands, and is patient with your questions. Do they use terms you understand? Do they let you speak without interrupting and give you real answers?
Services and analysis – At first, you may just want someone to generate basic reports and prepare taxes, but as you grow, so will your needs. For example, not all CPAs do financial analysis. As time goes by, your questions will become more complex, and changing to someone new will only cost time and money. Start from the beginning with someone who can grow with you and offer advice on all the stages of your business.
A good CPA may even know when you’re ready to grow before you do! Because you chose well, they will also help you find the right path to the finances you need to move forward.