Most small business owners begin with a fantastic idea and a passion for what they intend to offer the public. They may spend hundreds of hours organizing themselves to be able to finally open their doors to the public. For the majority of people, the first few months may be stressful, a baptism by fire if you will. With every passing day, the owners understand increasingly more about what works and what does not work in terms of attracting potential clients and closing sales.
Hopefully the firm did their homework prior to launching their doors and found that their business will have taxation obligations which they never had before as people. If the company is a corporation then they’ll need to pay themselves as W-2 workers. This usually means that the corporation will withhold payroll tax from the employee (essentially themselves) and have to cover the company’s half as well. Afterward, of course, there are deductions that the corporation can make in order to lower their tax obligation. Sometimes deductions can be made but are overlooked by busy business owners. Things can get complicated very fast, and before you know it, that nifty Quickbooks program the owner bought can turn into quicksand, sucking on the most precious commodity any business owner gets, time, right out.
Sooner or later, most companies turn to an accountant in order to look after their financial record keeping. A quick web search for an accountant using Google will return tens of thousands of CPAs, Independent Accountants, and Bookkeepers. At this point, you may be confused and ask yourself, what is the difference? Well, why is it that you think I wrote this report? The listing of daily financial transactions and their appropriate categorization is generally done by means of a bookkeeper. Some bookkeepers may also offer other services such as the compilation of financial statements, payroll processing, quarterly tax filings, and income tax preparation alongside other services. Essentially, a bookkeeper that offers all of those services is acting as an independent accountant, in other words, an accountant that isn’t chartered by the State just like a CPA is. Contrary to a bookkeeper or an independent accountant, the CPA (Certified Public Accountant) can carry out an audit as well as some of those other tasks which the others may perform. Regrettably, for people, in most nations, the only one of these three professionals who can advertise themselves as an”Accountant,” is a CPA. Makes you wonder just how powerful their lobby is doesn’t it?
In order to become a CPA, a person needs to take a particular number of master’s level courses in accounting along with their undergraduate courses which didn’t necessarily need to be business related. Then, that individual can either sit for the state CPA exam immediately and then operate under the supervision of an already licensed CPA for two decades or vice-versa. It is definitely a long and tedious process, and they will charge you accordingly (student loans don’t come cheap). That’s all nice and dandy, and surely anyone who puts themselves through that sort of academic analysis is worthy of admiration. Nobody is arguing against this. However, as a consumer, I am personally looking for the best cost and the individual who is going to get the job done correctly. Yes, CPAs are highly educated, but do I really want to pay exorbitant costs to somebody who went to college for a decade just for my bookkeeping? My answer is a resounding no. (Especially when some bookkeepers are highly qualified. Some even hold Master in Business Administration (MBA) levels ).
There are, of course, companies out there that need the stamp of approval which comes with a licensed CPA’s audit of the financial statements. A company that is wanting to get investors on board to spend tens of thousands of dollars, by way of instance, will definitely want a CPA to sign off on their financial statements in order to ease any investor apprehension. Somebody who is looking to get an extremely large loan by a lender (99% of small businesses doesn’t ask banks for loans worth millions of dollars) is going to need a CPA to conduct an audit. But let’s face it, the majority of small to medium-sized business owners won’t ever have a need for an audit conducted by a CPA. Even when they did require an audit from a CPA that doesn’t mean they can not get one with the financial data accumulated by a bookkeeper or an independent accountant.
A CPA is only going to confirm and sign off on the work already done by the bookkeeper (and charge thousands of dollars for his signature). Most CPA’s do not do the real day to day work that bookkeepers do. They either have bookkeepers they keep on staff to perform this work or they outsource the accounting work to some bookkeeping company. So why would anyone want to pay ridiculously substantial costs to a CPA so as to get their accounting done to get their small or medium sized business? Beats me.
In all fairness, I can see how a person with no understanding of the accounting industry would feel safer traveling with the CPA. He’s got the level, the huge office, and the prestige to impress any small business owner’s socks off. The truth is though, almost any self-respecting, hard-working, serious bookkeeper can perform just as good of a job or even better than that exorbitantly priced CPA in a much fairer price. In reality, if you have ever had your bookkeeping done by a CPA then odds are the job you saw was completed by a trustworthy bookkeeper. My advice to anyone looking for an accountant would be to spare yourself a lot of money and give your financial record keeping duties to a professional bookkeeper who provides another service I mentioned before as well. Chances are that you won’t only get a better price, but you will receive better customer support because firms such as yours are a bookkeeper’s bread and butter, not only a supplemental source of income because most CPAs perceive their accounting clients to be. Not only that, however, you’ll likely develop a long lasting relationship with your bookkeeper and possess a fantastic asset on your group. I hope you’ve enjoyed my post for the afternoon and stay tuned for more to come. www.ryankagan.com/