Starting a new business is always intimidating, at least until you find your footing, a constant clientele and a standardized production method. However, there are a few things you can do to grow your business immediately.
Working with an expert CPA is one of those things, as they can prove to be invaluable when you’re developing your business.
To profit from a CPA’s knowledge of the ins and outs of corporate finance, you don’t have to hire one as a full-time or even part-time employee; many offer their services as consultants. You should hire a CPA in the following situations:
Starting A New Venture
At first glance, it may seem like a waste of time and money to pay a CPA hundreds of dollars for a few hours of consultation. However, it’s an investment (and a tax deduction) much like many other starting fees.
A CPA can assist you in forming your company so that you don’t make costly blunders. These are some of the decisions that a CPA may help you make as you start your business like constructing your business structure.
Developing your business structure
CPAs can advise you on the most appropriate business structure for your organisation. Your business’s legal structure – sole proprietorship, partnership, LLC, corporation, or co-op – has an impact on your taxes, liability, and reporting requirements. It can also be difficult to make changes later, as it may necessitate reapplying for licences, obtaining a new employer identification number, or notifying your bank and insurance provider.
Taxes, taxes, taxes
Everyone knows that the primary reason anyone hires a CPA is to do taxes properly. Making a mistake on your tax report is going to go very badly with the people at the IRS, and you’re more than likely going to face penalties for reporting your taxes wrongly.
That’s why you should let your CPA take care of that – CPAs are experts at taxes and they won’t make the mistakes you, yourself, could. Underpaying isn’t the only problem with taxes, though.
Some people miscalculate taxes and they overpay them – losing quite a bit of money in the process.
Another important note when it comes to taxes is that accountants usually know of all the loopholes and legal ways to reduce your taxes. There are many non-taxable expenses that you can spend money on, and your CPA can help you develop a strategy to minimize your taxes.
Starting Your Business
Based on personal experience, accountants don’t only know how to work with taxes, but they’re pretty hands-on with paperwork in general. If you’re going to start your own company, you should know in advance that there’s a lot of paperwork involved.
This can be a hassle, but most accountants know their way around it very well, not to mention that some of them will help you for free since you’re their future client.
Coordinating your way around paperwork is a big time saver, because some documents need days before they’re actually released, and this is just one of the things that your accountant will warn you about. You can apply for such documentation in advance, so you won’t waste time waiting for paperwork.
This is a very general term, but in this instance, it means controlling your business’s budget. It’s very important for a business to establish a bottom line and not to go over that line.
For example, you can only start spending money on new equipment or renovations once you have enough money for that on top of paying your taxes, bills, rent, work force, etc.
Even though your business might be making money instantly, there’s a certain minimum you have to make on a monthly basis to stay afloat. Additionally, you have to control your spending to ensure a healthy flow of profit.
This means that you have to have at least some money in your business’s bank account at all times. There are businesses that don’t have a constant influx of money, but rather receive large payments once or twice a month.
“Spending most of that money as soon as you earn it will destabilize your investment plans because you need to have a stable amount of money in your account all the time., ” says cst-cpa.com, an accounting and CPA firm. Even though you’re making money, you could end up in a bad spot if you don’t time your spending properly.
An accounting and CPA firm will also control your spending and advise you on any future spending. Even though you’re making money, you could end up in a bad spot if you don’t time your spending properly.
Buying and Selling
If you’re thinking of acquiring another business for your brand or selling your business because you think it reached its peak – consult your accountant before you do.
You should never, by any means, sell your business before taking a good look at the numbers.
Business owners usually sell their business for one of two reasons – they either think that they’ve reached their peak and they can’t earn more than they’re earning right now, or they think the business is failing and they want to cut their losses.
Whatever your situation may be, speak with your accountant before you actually sell your business.
A great thing about math and statistics is that numbers can’t lie, and even if you think that your business can’t grow – your accountant could prove that it can.
The opposite is also possible – even though you think that your business is doing great, you might actually be in a slow and steady decline, and you should sell your business to minimize your losses.
What to Consider When Hiring A CPA?
As you can see, a CPA can assist you at every stage of your company’s lifecycle and isn’t just useful during tax season. Here are some things to bear in mind if you’re looking for the proper person:
- Look for a CPA who has experience in the field in which you work.
- Ask other company owners for referrals.
- Make sure they’re reputable before you hire them.
- Be sure to check if they’re legally permitted to operate in the state where you are located.
Either way, accountants are the most important appraisers when it comes to buying and selling. Numbers are the least biased way of determining whether the planned move is actually good, and your accountant will know whether your decision is good or bad instantly.