If you are at the helm of a startup you will no doubt be fired up by the exciting challenges ahead as you try to make your mark and build a successful business, and some financial aspects of the business like payroll and taxes, might not be the main focus of your attention.
It is always important to start out on the right track and hiring a Certified Public Accountant could prove to have some long-lasting benefits, as a CPA could provide you with some invaluable planning advice and help you to make the most of any tax-planning benefits.
On this page
Does a small business need a CPA?
You could argue that many of the accounting tasks required by a small business do not necessarily need to be handled by a CPA, which might make you question whether you can justify the expense of hiring a professional for a business of your current size and stature.
Operating costs are always going to be on the agenda in small businesses and especially so in a startup where access to funding might be restricted at such an early stage of your venture.
Whatever your plans for the future of the business, it is always a good idea to develop a robust accounting procedure that satisfies the requirements of the IRS and gives you access to concise and up-to-date financial data.
It can also help if you are trying to secure some funding for the business if you have a CPA on board as this can give lenders a degree of confidence that your financial statement preparation will be in professional hands.
Every business will need to address the need for record-keeping and tax preparation, so it is a case of whether you want a CPA to guide you with the skills they have acquired, which may well allow you to concentrate on growing the company if the financial reporting is being taken care of.
The role of an accountant in your business
A CPA can play a pivotal role within your business, right from the very beginning.
They could help you with entity choice and creation, giving you advice on which entity to choose based on your immediate and future intentions and requirements. They can also help you to create a credible business plan which will help you to make accurate cash flow forecasts and also assist you if you are looking to raise some funding for the venture.
It is also possible that you might need a CPA to perform an audit and another important consideration is tax planning. Your accountant should be able to identify the available tax credits and deductions that you are able to claim, as well as putting a plan in place that aims to reduce your long-term tax burden.
Although you could feasibly do bookkeeping and payroll yourself, as well as taking charge of accounts payable and receivable plus general ledger duties, you may find that your time is better spent using your skills elsewhere in the business and view the cost of hiring a CPA as a justifiable expenditure.
On the payroll?
If you considered the option of using a CPA, you might then want to consider whether you can justify the expense of having a qualified accountant on the payroll, if you are operating a fledgling business.
The size of your business, funding, and future plans, may well play a part in whether you can justify employing a CPA on the payroll. You will find that the vast majority of accounting firms will provide you with a flexible service, which means that in the beginning, you might want to use the services of a CPA on an ad hoc basis, only paying for the accounting services you need and when you need them.
You might want someone to come in once a month and review your accounts or at whatever interval seems prudent, if you can’t justify the cost of employing an accountant directly at an early stage.
As your business grows, you may need to employ a full-time internal accountant.
Inspiring confidence in your business
The fundamental point about hiring a CPA is that although many accounting tasks could feasibly be completed by yourself, it is important that external sources such as investors, lenders, and the IRS, have a level of confidence that your financial records and statements are accurate.
If you are looking to obtain funding or intend to take your business public at some, using a CPA from the outset, could provide the financial foundation that allows you to make the progress that you anticipate and want for your company.
Sienna Power is studying for an accounting degree and training to be a CPA accountant. She enjoys sharing her research online. Her articles mainly appear on business-related websites.
