Many businesses experts will recommend that small, mid-sized and large businesses outsource their accounting tasks to a firm of CPAs to do it. While this generally is good advice, it does come with significant costs, so you need to make sure you have the right CPA to make the costs worth it. Not every small business necessarily needs a CPA, especially if they’re starting out without needing all kinds of accounts payable or receivable entries in their ledger, or dealing with complex taxes. But there are five signs that indicate you may want to outsource accounting to a CPA.
1. You Need A Business Budget That Will Work For You
As your business is having demands for more inventory and you’re in a situation where you need to get a better feel for your cash flow, you may need a budget to adhere to. CPAs can get some great insights on how you’re managing your cash flow, how much you’re designating for overhead, managing your payroll, and managing debt. This can be quite a bit harder to put together than a personal budget, and an experienced CPA can help you and your bookkeeping staff put together a realistic business budget.
2. You’re Doing Well In Sales And Realize Your Business Is Growing
Growing sales and growing revenue can mean increased opportunities and a chance to increase your cash flow, as well as opportunity possibly to get a business loan or finance equipment. As businesses grow, tax filings and financing needs can change, yet even as your revenue increases trying to get a business loan, even an SBA loan can be very difficult. A CPA is very knowledgeable on business loans and will be able to guide you through difficult application steps needed to get approved for one. As a close advisor, they may be able to point you towards a loan that maybe you didn’t realize you qualified for.
3. You’re Going To Need Detailed Financial Assessments
Sometimes you need more information on how you’re truly doing financially such as why you aren’t seeing a higher influx of cash into accounts receivable, a greater ROI on services you’ve paid into, and where you’re trending at your current financial rate. CPAs usually use more than just basic accounting software and checking numbers for discrepancies. They can actually use advanced projection software and let you know how your company will look down the road. In some cases where major discrepancies appear to be occurring, a CPA could alert you to fraud that should be investigated.
4. You’re Considering Restructuring And Changing Your Business Registration
For businesses that just start out with one owner and have limited operations, registering on tax forms as just a sole proprietor is usually the way to go. But when you start growing or getting more people involved in managing it, it may be time to register as a different entity. Hiring an outsourced CPA to help you with this is usually the best approach since they know state laws on business registration, and can help you choose the right entity to register as. This can make a huge difference in what you may pay in taxes or how you’ll be audited.
5. You Anticipate Possibly Running Into Complex Tax Codes And Want To Minimize The Risk Of An IRS Audit
You never know when you could get a letter from the IRS asking for business tax filings, including those that happened years ago. When you have a fully certified outsourced CPA firm doing your taxes, they know all the laws and codes that the IRS enforces, and they can handle the requests that their auditing department sends. In fact, since CPAs that have chartered financial analyst designation can usually catch errors that may trigger an audit if left unchecked.
