If you live in the “real” and “normal” world, you probably can’t imagine income in the millions or billions of dollars – although it would be nice! And sure, it would be great if you had a CPA to manage those millions. However, for some small businesses, it can be an effort just to break even, especially when self-employed or when beginning a new business. You might wonder if you really need a CPA, if you can afford one, or if you can manage the numbers of your business on your own. In this blog we’ll talk about why having a CPA is a necessity for a small business owner, rather you are making millions…or just thousands.
Why do I need a CPA?
Think of hiring a CPA as hiring a member of your team. A CPA does more than prepare your business tax documents and file your return, they can actually save you money. A good CPA can advise you on ways to reduce your tax liability and how to find creative tax breaks. They can also stay up to date on the myriad of tax changes that occur each year and will represent you if you are audited by the IRS. Business financials can be difficult to understand and having a CPA will add a knowledgeable guide to help with all of the financial aspects of your small business.
CPA’s are most knows for filing quarterly and yearly tax documents, but they can do so much more for you and your small business. Here are some things your CPA can handle:
- Counsel you on ways to increase profits and decrease expenses
- Give advice on individual investments or retirement planning
- Help with bookkeeping, payroll and monthly or quarterly reports
- Forensic accounting (tracing where money comes and goes)
How do I find a great CPA?
First, I would suggest checking your local chamber of commerce business directory. Our local chambers serving our PJC areas are vested in our business community and a great resource. Your local SBDC will give you a resource list of local CPA’s.
Next, remember is not every CPA is alike. CPA’s specialize in different industries. Some CPA’s only do industrial management, while others take care of financial matters related to government entities or even non-profit organizations. Take into consideration the type of CPA you are looking for: one who specializes in your small business-type. Here is a list of things to do when finding your own great CPA:
- Determine their specialty
- Look up their license: All CPA’s are required to be licensed.
- The Texas State Board of Accountancy Licensing can help you look up their license.
- Verity their tax ID number: The IRS requires CPAs who prepare taxes to register with the IRS and have a Preparer Tax Identification Number (PTIN). To verify that a CPA is registered with a PTIN, simply search the IRS Return Preparer Office Directory.
- Ask about their experience: Have they filed electronically? Can they manage spreadsheets and different types of software?
- Will they sign your tax returns? Consider it a red flag if they won’t sign your returns as the preparer.
- Check their Yelp and Google reviews.
- Check your local Better Business Bureau
- Ask your friends and business associates: They may have a CPA that they love and trust
- Determine their fees: Are they in line with other CPAs? Do they have a fee schedule they share with prospective clients?
- Conduct your own interview: Make an appointment and sit down with your prospective CPA. If you can ask questions and get answers, while feeling comfortable and confident in their knowledge (and the way they respond to your needs) that will go a long way in helping you determine the best CPA for your small business.
What should a CPA cost?
CPA’s have different costs for different tasks and their fees can vary. Below is an example (only) of “normal” CPA fees in the state of Texas. Please keep in mind that the more specialize your business, the bigger range of fees. In general, the average prices in Texas are:
- Tax preparation
- $250 for Form 1040 without itemized deductions.
- $300 – $500 for an itemized Form 1040 with Schedule A and C.
- $900 for Form 1120S – S corporation
- Hourly rate: *Be careful of hourly fees and get a maximum amount ahead of time.
- $50+ average
- Quarterly tax documents
- $50 – $200, depending on complexity
How to save money on a CPA:
CPA’s are necessary for things like tax documentation and filing returns, however you might ask your CPA if they have accountants on hand within their firm. An accountant can often do bookkeeping and prepare financial statements at a lower cost than a CPA.
For additional information how to find a great CPA, or on how to maximize your small business dollar by using an accountant along with a CPA, please contact us at the Small Business Development Center – SBDC – Serving Paris area: Lamar, Hunt, Hopkins, Delta, and Red River counties.