One of the most important jobs — whether internal or outsourced— in any business is an accountant.
An accountant, according to accountingtools.com, is “a person who records business transactions on behalf of an organization, reports on company performance to management, and issues financial statements.” Certified public accountants have met the requirements of their state and are authorized to practice accountancy. CPAs and PAs are required to complete continuing education to remain eligible to practice public accounting.
Your state’s board of accountancy can provide advice for selecting a qualified accountant, as well as tools for verifying accountants’ licenses, and reporting and checking on any complaints.
“A traditional, well-educated, skilled, experienced, ethical CPA can be a businesses’ most trusted advisor,” says Ned Leiba owner of Leiba & Bowers CPAs in Stockton, California.
You might be asking yourself, “Should I hire an accountant for my small business?” Here are some things to consider when making a decision, in terms of what they have to offer.
It may be tempting to cut costs by picking up an accounting software package, but that software can wreak havoc if just one figure is entered incorrectly.
“[Business owners] don’t know the philosophy behind accounting. It just takes a repetitive entry someplace on the wrong side to a number off, which throws off your whole profit schedule,” says Mia Breen, California registered CPA. If the books are off, they no longer represent the status of the business, Breen explains.
“So often, software may not be specifically attuned or you have to beat it to death to get it to do what you want,” says Leiba, Individual businesses all have specific nuances that will affect property and income taxes, Leiba continued.
To maintain their certification, CPAs must take annual continuing education classes, keeping them abreast of the latest practices and laws.
“If you’re in small business, minimizing your tax liability is important when you’re becoming solvent,” says retired California CPA Bill Hart.
It’s not just a matter of balanced books and saved taxes, though. Accountants can review small businesses’ practices and help them save money, Hart says.
“When I was working for [a manufacturer], I looked at how much they were spending on maintenance and repair. They did not have scheduled maintenance. They’d run a machine until it broke down. I told them if you had scheduled maintenance, you wouldn’t have downtime. They said, ‘We thought you were going to tell us to pinch pennies and lay people off.’ I want to help people to work smarter,” Hart notes.
The professional advice and understanding are accountants’ key values according to Leiba. “With independence and operating within a strong ethical framework, we are free to tell the truth,” he explains. “We do not sell anything except our very best advice.”
An independent CPA can serve as a point person the same way your general practitioner serves as a point person for your healthcare, taking care of the ordinary issues, then pointing the more complicated issues to a specialist, says Leiba.
“In many cases, we can efficiently address needs without engaging specialists, but we are in a position to judge when more expensive, complex professional or technical services are needed,” he says.
When you do get an accountant, you’ll still need to be involved in reviewing the accounts, says Breen. “The statements show the details of the business and the owner needs know that in order to manage more effectively.”
It’s possible to use software to keep abreast of your business and partner with your CPA, Breen says. She recommends showing your books to your accountant monthly or at least quarterly. She recommends purchasing a software package that gives access to the ledger so that your accountant can quickly identify any mistakes you may have made. A general ledger, according to myaccountingcourse.com, is a record of all the transactions a business has made. It divides accounts into assets, liabilities, and equity accounts. Being able to see the specific entries will help your accountant track down the details of the money you’ve brought in and the money you’ve spent and advise you accordingly.
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