One of the most lengthy and non-productive parts of managing a business is keeping all the financial records safe and well managed in the long run. With the help of an individual like a CPA or a full-fledged finance team, you can manage and monitor the finances easily and make better plans for the future of your business.
A CPA is a person who can act as a finance manager of your company, and also as a sincere and qualified advisor.
Are CPAs Any Different From Accountants?
Not every accountant is a CPA, but being an accountant is a prerequisite for becoming a CPA. The only noticeable difference between “just an accountant” and a “Certified Public Accountant” is that the candidates have to pass a certain exam to get the license. The accountants are also required to have certain experience in the accounting field (usually 2 years) before they can apply for and appear in the CPA exam.
In addition to the standard tasks that the accountants come across on a daily basis, the CPAs are trained to handle much more complex tasks and they always have in-depth experience in the accounting field. You don’t just pass the CPA exam and get the license for the rest of your life, but you’ll have to continuously renew the license (the frequency depends on the state they’re licensed with). This is done just to make sure that the accountants stay up-to-date with all the amendments and latest updates in the world of accounting.
Accountants And Bookkeepers Are The Same People, Right?
Although both of these tasks are vital for small businesses, accounting and bookkeeping are two completely different things, and so an accountant and a bookkeeper are two different individuals.
To put it simply, you can think of a bookkeeper as a finance expert that deals with the short term finances, while an accountant deals with the long term financial goals of your business. For example, most of the duties of a bookkeeper include managing the day to day financial activities of a business, while on the other hand, the accountant manages the tasks like tax returns and often makes long term financial plans and goals for the business. Your business is bound to run smoothly if both your accountant and bookkeeper work in collaboration. If the bookkeeper follows the rules and doesn’t make any mistakes in his daily work, the accountant won’t have to face many difficulties in his long term work either.
Which Is Preferable, Accounting or Bookkeeping?
If you have even the slightest idea of how the business works, you’ll know that having both an accountant and a bookkeeper isn’t necessary at all. But in this scenario, you must go with an accountant, and here’s why.
Due to the technological advancements in the business software and systems, you can fully automate the bookkeeping process by using a bookkeeping service (a software) especially if you run a small business. This can eliminate all human errors and might save you a lot of money in the long run. There are lots of other benefits of using bookkeeping software and not hiring a bookkeeper, but no computer would be able to give you business advice if you skip hiring an accountant. Your accountant will use and manage that software for you.
The Benefits Of Hiring A CPA
By hiring a certified accountant from an organization like the United CPA Association, you aren’t just saving your precious time, but you are also potentially saving a lot of money. That is because the accountant can give you some really valuable advice on how to save yourself and your business from fines and tax-related penalties.
If you do the accounting tasks by yourself, then hiring an accountant can save a lot of hourly fees that you’ll have to pay yourself every month. Additionally, the accountant can make new plans on how to make all of your business processes more efficient to minimize or eliminate the waste of money while optimizing the growth of your business.
Additionally, various independent studies suggest that small businesses spend over $800 every year to pay for the tax-related penalties due to small errors in their payroll and other financial activities.
They Can Help You With Taxes
Every year when the tax season is just around the corner, your accountant will help you with your taxes, and most of the smaller mistakes can be avoided when an accountant is preparing your taxes.
While some business owners decide to do the tax calculations by themselves, and there’s nothing wrong in that, an inexperienced person can often skip some important steps and can get into trouble real quick. The thing that often makes the taxes too much complicated is the fact that you might need to file taxes with more than one states if you operate in different places, an accountant can take care of these things too while adhering to the rules.
Tax deductions are also a domain that you can get help in by a CPA.
Setting Up The Business Becomes Easier
You can hire a CPA right from the start and have him help you in selecting the right legal structure for your business. This way, you won’t have to think hard about the legalities.
Managing the employees and selecting the right insurance package also becomes easier when you have an accountant advising you.
Helps You Make Long Term Decisions Easily
An accountant has no investment in your business, so, he’ll be able to take an impartial and professional look at your business model, and will help you make some of the most important long term decisions without being under the influence of any emotions.