This is a common question we get when talking to potential clients. Whether you’re a sole proprietorship, an LLC or an S-Corp – no matter the entity configuration – taxes and finances are complicated and ever-changing. If you’re asking yourself this question, the answer is probably yes. But we might be a little biased.
So instead of answering that question directly, let’s talk about the differences between what an accountant does and what an accountant/tax preparer/CPA does for a small business. We’ll discuss situations we often encounter with potential clients, as well as success stories and the benefits of having an accountant on your team. And then you’ll be able to decide if you need CPA services for your small business.
We love to be approached by new entrepreneurs. It makes it so much easier to start your business off on the right foot. From a tax standpoint, it’s about understanding how your business will be taxed (depending on the type of company), and from a financial reporting standpoint, it’s about understanding how your financial statements should be prepared and, more importantly, what they tell you. In terms of growth and direction, it’s about setting goals for the future and, given the current economic situation, identifying the best ways to achieve those goals as the years go by, costs increase and there seem to be fewer and fewer hours in the day.
While inexperienced business owners can manage to make enough money to get by for a while, they are often surprised by the amount of taxes to be paid on the income they generate. When first-time professionals come to us, they can rest assured that they will know the amount of their taxes months in advance of the tax due date and will be able to estimate to reduce the burden or set aside money to avoid the tax bill. They will also know exactly what other taxes (on wages, sales, etc.) their company is subject to, so they can work without worrying that things are not in order.
It is much more difficult to unravel the problems that respectable entrepreneurs may have. Those who have made some critical mistakes along the way and simply ask for help. There is nothing wrong with this attitude, but there are clearly advantages to having an expert on your team early on who knows the compliance requirements, especially in the tax arena, as the fines, interest and, most importantly, the time it takes to correct these mistakes can be costly.
It is not too late to correct mistakes and work to keep your business running smoothly. We have seen many situations where taxes have not been declared for years, VAT has never been collected, businesses have been opened in a municipality without the proper license, social contributions have not been paid on time, etc. We have also seen many cases where taxes have not been declared, VAT has never been collected, business has been conducted in a municipality without the proper license, social contributions have not been paid on time, etc. And all these cases were solved without problems, without losing the house or going to jail. Accountants, and especially us, have seen it all, so don’t think you are alone.
Having gone through the pandemic chaos with a few hundred entrepreneurs, we were also reminded how important it is for entrepreneurs to have access to accurate and complete financial information when applying for loans and grants. Not only is it important to demonstrate eligibility for certain programs and identify the amounts you are eligible for, but it is also important for business owners to really look at their overhead, the costs they have to incur whether they make sales or not, and identify the costs they can waive or defer and pay if the business can afford it.
Entrepreneurs need someone on the team to work with them to sort through the numbers, interpret them and advise. And since we don’t live and breathe the business 24 hours a day, seven days a week, we can do that without emotion. And that’s what we like to do! In recent days, we’ve received very good feedback from clients holding their semi-annual meetings, confirming these same points.
