What does your CPA say when they see your books?
Whether you need your CPA to do your taxes, help find tax savings or review your books for investors, it’s in your best interest as a business owner to come prepared.
While a CPA can straighten out your books for you, this isn’t their main purpose that’s really not what you should be paying them to do. So, if you find yourself getting billed for this, chances are you’re wasting your time and money. Worse even, coming to them with a mess of documents can make you look interesting (yep that’s a euphemism for don’t know what the hell you’re doing). By making sure your books are ready for them, you can save yourself and your company both headaches and cash, while ensuring you look like the hero business person you are.
What your CPA wants (and how it can save you money)
As a business owner, you have to wear multiple hats. That last thing you need is to worry about your finances. With your CPA, you can rest assured knowing that someone qualified is working on your behalf to make your life as easy as possible.
Now, you might be asking yourself how a CPA can save you money. After all, you’re spending money on their services. But the thing is, working with a CPA is a collaborative process. If you go in with clean books, you can ultimately end up cutting down on costs and lost time.
To better understand how they can do this, it’s important to first understand a CPA’s main role, which is to:
- Prepare and file tax documents, including tax extensions
- Work with your CFO on strategic planning
- Defend tax audits
- Aid with strategic planning and budgeting for your business
Whether you’re starting fresh with a CPA or have a long-standing relationship with them, they can perform better when they have access to clear accounting books. If you can give them this, you can help streamline the process of filing taxes for your business. Not only that, but you can cut down on how much you end up spending on tax preparation.
Plus, by keeping your books straight, you’re making it easier for your CPA to review them as quickly and efficiently as possible. This also reduces time lost. And it helps them find you every possible tax break or deduction to decrease how much you have to pay.
CPA vs. Accounting Books Preparation And Maintenance – What’s The Difference?
Although some people use the terms CPA (Certified Public Accountant) and accountant interchangeably, they’re quite different.
As a whole, accounting refers to the recording and reporting of all financial transactions. This typically includes daily/monthly accounting and at least some tax-related services.
If you need someone to help with accounting preparation and maintenance, both a CPA and an accountant can do this. But CPAs typically cost four-to-five times more than general accountants due to the additional services they provide. By leveraging an accountant or outsourced accounting service to keep your financials clean, you can maximize your CPAs’ time and help them focus on delivering the greatest value for you.
An accountant can handle many of your business’ accounting needs, including:
- Handle bookkeeping (eg. keeping records of all financial transactions and preparing relevant financial documents like profit and loss statements)
- Help manage payroll
- Issue, manage, and pay invoices
- Review and verify any transactions
A CPA is an accountant who has obtained a certain level of education and experience. Along with this, they must pass the Uniform Certified Public Accountant Examination, or CPA Exam to become licensed. This is an official examination administered by the American Institute of Certified Public Accountants, a nationally recognized organization.
CPAs can handle the same tasks as general accountants, but they’re also uniquely qualified to do the following:
- Handle all of your tax planning and preparation needs
- File taxes and sign tax returns on your behalf
- Offer financial or tax-related advice
- Compile your business’s financial information and prepare reports for taxes
- Keep you informed of any tax-related changes or updates
- Help you understand tax codes that could impact your company
- Audit your business’ financial statements
- Represent you during tax audits
- Advise you on the bigger picture of your business’s financial situation
Ultimately, all CPAs are accountants, but not all accountants are CPAs. Both professionals can help your company manage its finances. But if you need someone to maintain your books of accounts, you should opt for a general accountant or an outsourced accounting service like Keep Financials.
Benefits Of Preparing And Maintaining Your Books Of Accounts
Whether you choose to https://keepfinancials.com/accounting-services/outsource your accounting needs or do them yourself, the important thing is that you do it. No matter the size of your company or your industry, you need to keep clear records throughout the year. Doing this will keep you on track, decrease costs, and help ensure your business’s long-term financial success.
Track Your Incomes And Expenditures
Proper account preparation and maintenance can help you get a better understanding of where your company is at financially and legally. Whether it is from a sales point of view or an expenses point of view, every business has its assets, income, expenses, and liabilities. Your records should show every transaction.
This information can give you a clear idea of how your business is growing over time. It can also show you which assets are more or less productive. Plus, it can help you see where you might be overreaching so you can cut back on unnecessary expenses.
With clean records of your income sources and deductible expenses, you can receive the most tax deductions and maximize profits. As a business owner, this is vital to your long-term success, especially when it comes to navigating financially tough times.
Improve Your Business’s Chance Of Success
Good, clean accounting records can drastically improve your company’s chances of succeeding. It can also show you how quickly your business is growing, as well as highlight your weak areas. In the latter case, your records can show you where to make improvements.
If you work with an accounting service, you can get accounting and financial data which can be used in decision-making. In particular, if you use a third-party service, you can get clean monthly books done on time without any delay.
Prevent Fraud And Theft
Clean financial statements and records can help you prevent theft or fraud in your company. After all, these documents can show you the cash flow within your business and keep you aware of any discrepancies or gaps.
Providing your CPA with clean accounts will empower them to spend more time on specialized services and will enable them to discover any discrepancies in your accounts with ease.
Ensure Legal And Statutory Compliance
Running a business, no matter its size can be tricky. With clean accounting records, you can rest easier knowing your statements match what you report on your tax return. The great thing about this is that you can use those same records to track your company’s progress and make strategic plans for future growth.
Besides, if ever you’re facing an audit, your records will make it easier for you to show or explain any items you reported. Plus, accurate records can help minimize your tax liability for the upcoming year and help prevent future audits. Since taxes are one of the highest expenses most companies face, it’s always wise to get ahead of them.
Keep in mind that filing business taxes are quite different from filing personal taxes. As you’re dealing with all the other aspects of running your company, the last thing you need is to worry about the ever-changing tax codes.
Because of this, it might be necessary to hire a certified professional to help audit your books of accounts. They’ll be able to let you know whenever a relevant tax code changes, which can help make your business more profitable while keeping your life (relatively) uncomplicated.
Catch Problems Ahead Of Time
Last but not least, having an established accounting and maintenance system can help you catch any other problems before they happen. This isn’t just for tax season either, though it certainly helps.
Your business records will give you a chance to cross-reference reports from previous years. While this won’t give you an exact figure, it can help you estimate what this year – or the next – will bring. Even an estimate can save you a lot of hassle and money when it comes to making a budget or other aspects of financial planning.
Clear Books Of Accounts is What Your CPA Wants To See
The financial and accounting side of a business is a major source of stress and anxiety for many business owners. But you can make your life easier and cut back on costs and lost time by outsourcing your accounting preparation and maintenance needs.
Whether you’re still establishing a system or you need an overhaul, a professional outsourced accounting service can streamline the entire process. It does, however, start with you. If you want to avoid a complicated tax situation and ensure your business’s continued success, keep your books straight.
On the other hand, if you’re currently paying a CPA to clean your books for you, consider outsourcing to maximize profits and save time.
So, what does Your CPA say when they see your books?