July 09, 2012

3 Benefits of Having a CPA

Few business owners would trust an office employee to perform surgery on their children, or try to do it themselves. Yet every year businesses make poor financial decisions or fail to take advantage of legal tax deductions because their owners try to do their own accounting or hand it over to untrained employees. When it comes to business or personal accounting, here are three reasons why it pays to have a certified public accountant (CPA) on your side.

Professional Service

CPAs must attend and pass numerous accounting classes, pass a strict exam and keep on the cutting edge of the field by taking continuing education classes every year. To practice in your state, a CPA has to be licensed by the state and must follow the state's strict rules for doing business.

Payroll services, bookkeepers, tax preparers and debt management companies don't have to meet these standards. In fact, if you use one of these services, your books may never even be seen by a CPA. It can also be very hard to gauge the quality of service you are getting from some of these CPA look-alikes.

Saving Money

Staying within budget can, and often does, make the difference between staying afloat and going out of business. It can be tricky to determine which goods and services actually represent the best bargain, however. The cheap toilet paper may cost only half as much but that's no bargain if it runs out three times faster. When it comes to your company's accounting, it's tempting to have an hourly employee take care of it between answering phone calls or to hire a bookkeeping or payroll service to do the job. In this case, however, the cheapest route will likely cost you in the long run.

CPAs are highly trained professionals, and their fees reflect that. You can expect to pay between $100 and $400 an hour for the services of a CPA. However, these figures don't tell the whole story. If you end up saving money on your taxes for the year or use tax regulations to your advantage on the advice of a CPA, you may end up saving more money than you spend on a CPA. When you are figuring out how much a CPA will cost, don't forget that if you don't use a CPA you will still have to pay someone to do your taxes and other accounting tasks. These costs may even be higher than you would pay a CPA.

If you are thinking about adding accounting and tax-preparation to your own already lengthy list of duties, stop to think about the real cost of doing so. How much do you make an hour when you are able to take care of your own business? That's money you won't be earning during the many hours it will take you to do the job. Don't forget that your trained CPA can probably do the job in a fraction of the time it will take you. If you make a costly error, that price will only increase.

Year-round, Long-term Service

While your friendly local tax preparer goes back to his or her regular job as a grocery store manager or college student after April 15th, your CPA is on duty and available all year long. This is important because following your CPA's tax-planning advice through the year can make a world of difference when tax time comes. CPAs are also available for a wide range of other financial services, as well as for providing help in the event of an audit.

Your CPA will also keep records of your documents from year to year. This continuity will help your CPA to do a better job with your accounting. It will also reduce the chance of errors and may reduce your costs, since your CPA won't have to familiarize himself or herself with all your financial details every year.

The business world is increasingly competitive, and it is more important than ever to be on top of your game. Tax time, and accounting in general, may seem far less important than meeting the needs of clients or making sales. Accounting is the backbone of any business, however. Who could be better to entrust it to than a trained and licensed professional?

Mike Thompson recommends Grassi for a New York CPA.

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