HIRING A CPA: Benefits and Costs Of Hiring a CPA

HIRING A CPA
Photo Credit: Complete Controller

When it comes to making big decisions or researching the business structure that will yield the greatest tax savings, a certified public accountant (CPA) is an invaluable resource for any small business. Accountants that specialize in taxes are known as CPAs. Consult a CPA for tax guidance before starting your company to determine the best business structure and accounting system for you. Your time and money may be saved by hiring a CPA, as they will also guide you in adhering to tax regulations. Now let’s take a look at the cost of hiring a CPA for taxes or a small business.

Role of a CPA 

CPAs are tax specialists who file your company’s taxes, respond to crucial financial inquiries, and possibly even make your company money. CPAs are certified differently from typical accountants while possessing accounting qualifications.

Here are a few of a CPA’s responsibilities:

#1. Tax filing, Planning, and Advice

All of your business’s tax requirements, including year-round bookkeeping and submitting tax extensions with the IRS, can be handled by CPAs.

#2. Tax and Financial Compliance

By bargaining with the IRS on your behalf, CPAs can lessen the cost of audit results if you are under audit. Their considerable expertise allows CPAs to avoid an audit by pinpointing tax and financial irregularities before they create a problem.

#3. Consulting

Your CPA can help you with budgeting, financial risk management issues, and other critical financial plans. They can also offer insightful counsel on complex financial issues.

#4. Forensic Accounting

CPAs can assist in maintaining your records and detecting fraud.

Payroll: If you don’t currently use the best payroll system, CPAs can set up your firm on an appropriate platform.

#5. Bookkeeping

CPAs are prepared to assist you in setting up, maintaining, and reviewing financial records throughout the life of your company.

CPA Vs. Accountant

A bachelor’s degree in accountancy or finance is required to be an accountant. A CPA possesses a bachelor’s degree but also holds other titles.

To become certified, every accountant must have professional experience, pass the Common CPA Exam, and satisfy all state licensure criteria. Their understanding of business, accounting, taxation, and auditing is tested. 

To stay current on rules and regulations, CPAs must also enroll in continuing education classes throughout their employment. A CPA has a fiduciary duty to their clients due to this certification, in contrast to an accountant. A regular accountant does not possess a license to lose, while CPAs are legally obligated to operate in their client’s best interests.

Hiring a CPA For Personal Taxes

Financial planning, tax preparation, handling tax forms, and profit-and-loss accounts are all activities that CPAs do.

Cost of Hiring a CPA for Small Business

This mainly depends on your industry as well as the services you require. According to the U.S. Bureau of Labor Statistics, the median hourly pay for CPAs is $40. However, this might not include particular costs for some consultations and services.

Before contacting a potential CPA, you must know what type of services you require. You can then describe in detail how they intend to charge you in this manner.

It’s crucial to be aware of standard costs and fees, even if it’s difficult to put a specific dollar amount on how much you should prepare for a CPA. When considering the cost of hiring a CPA or before you contact a CPA, have a sneak peek at some regular expenses like these:

  • Daily rates
  • Administration costs
  • Paper costs
  • Extra charges and services

When to Hire a CPA

An understanding of the ins and outs of business finance can be gained from hiring a CPA for small businesses, even if they are not full-time or even part-time employees, as many of them provide their services as consultants. You should take into account employing a CPA at the following times:

#1. Before You Start Your Business

Spending several hundred dollars for a couple of hours with the CPA while starting a business may seem expensive. It is an investment, though, and is deductible, like many other startup expenses.

#2. Tax Time

Hiring a CPA for taxes can lessen the hassle of preparing tax forms and submitting returns. They assist in developing plans to reduce one’s tax liability for the subsequent year. Additionally, CPAs can defend you if the IRS questions your return or when you or your company is under audit, which is a crucial factor to consider.

Even though you’ve always handled your taxes yourself, if your tax situation is complex, you might want to hire a CPA, considering business taxes are distinct from individual taxes. Hiring a CPA for tax filing, for instance, might save you time and stress if you hire staff or sell goods to clients in many states or countries.

#3. Special Circumstances

You could need a CPA’s skills at certain points when running your business. For instance, you should employ a CPA to represent you whenever you get a complaint from the IRS informing you that you are under audit or even asking for more information about your return. CPAs have experience working with the IRS and can assist you in providing the proper response, the data it requires, and a painless resolution of the situation.

#4. When You Acquire, Merge, Sell, or Close

When making some serious structural or operational adjustments to your business, such as when buying a company, merging with another, intending to sell or lock up your business, choosing whether to bring on a new partner or deciding to dissolve a partnership, you should speak with a CPA about the tax ramifications for both your company and yourself.

A CPA can assist you with your due diligence if you’re buying a firm by assisting you with the analysis of the financial records, asset verification, and other tasks. A CPA may collate your financial records and statements as well as provide you with an evaluation of your company’s actual market value if you’re selling it.

Hiring a CPA for Taxes

These are some instances when hiring a CPA is crucial for their advice:

  • Tax law observance: CPAs can assist you in comprehending and upholding tax regulations. A CPA can assist you in determining whether and how the modifications to the tax code will impact your business when they occur, like when the Tax Cuts and Jobs Act was enacted.
  • Appropriate deductions: CPAs can assist you in identifying the deductions for which you are eligible. While you should claim all of the allowed deductions, you also do not want to take any questionable deductions that could result in an audit. When you should or shouldn’t claim a particular deduction can be determined with the assistance of a CPA.

Benefits of Hiring a CPA

#1. You Will Have a Comprehensive Understanding of Your Company’s Finances

Businesses can keep track of their financial data using bookkeeping services. If you don’t know the amount you make each month, you can’t be sure whether you need to increase personnel or reduce spending. A bookkeeper can assist you with filing a tax return and adhering to accounting rules.

2. Ensures That You Are Not Paying Excessive Taxes

You might not be aware that you can pay taxes if you work for yourself. You can use bookkeepers to help you figure out if you qualify for particular credits and deductions.

#3. Prevents Fraud

Having someone else handle your books makes it more difficult for fraudsters to take your money, as they frequently target small firms. Bookkeepers can identify irregular transactions and alert the authorities to any questionable behavior.

#4. Minimizes Paperwork

Many small businesses are drowning in paper and can’t seem to find the light of day. You’ll have to manage one set of documents rather than dozens if you hire a professional to manage your books.

#5. Saves Time

You likely put in hours a week performing simple bookkeeping duties. Allowing experts to manage these duties allows you to concentrate on managing your firm.

#6. Obtains Precise Results

The majority of bookkeepers enter data using computer applications, which increases accuracy. If you attempt to do your books still, you run the risk of missing anything crucial.

#7. Increases Effectiveness

You’ll gain access to thorough reports concerning the current performance of your business whenever you engage a bookkeeper. These reports can assist you in spotting concerns before they balloon into larger ones.

Do You Need a CPA?

The help of a CPA can’t be overemphasized, especially regarding taxes and accounting issues. Hiring a CPA for taxes would give you a strategic approach.

What Do Most CPAs Charge per Hour?

One can hire a CPA for various reasons. Hiring a CPA for personal taxes wouldn’t be the same as hiring a CPA for a small business.

In hiring a CPA, one should budget a CPA and $40 per hour.

Conclusion

Licensed public accountants (CPAs) are experts who provide a range of accounting services to multiple clients in numerous specialized industries. They also offer a range of services, including specialized ones, in addition to accounting, bookkeeping, payroll processing, and auditing.

Hiring a CPA for a small business saves one from stressing over things that can be handled with expertise. Hiring a CPA is a good choice, especially for a growing business. The cost of hiring a CPA is around $1,800 to $2,500. This depends on what the CPA is hired for.

Hiring a CPA FAQs

How much do most CPAs charge?

The cost of hiring a CPA is around $1,800 to $2,500. This depends on what the CPA is hired for.

Why would someone hire a CPA?

Hiring a CPA gives you an edge on your taxes. CPA prepares financial statements. They also provide annual (monthly, quarterly) bookkeeping.

One can hire a CPA for various reasons. Hiring a CPA for personal taxes wouldn’t be the same as hiring a CPA for a small business.

What can a CPA do that an accountant can't?

CPAs defend a return in a case where there are reasons for questioning while accountants prepare tax returns.

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