Business owners wear a lot of hats. But one major job should be left to the pros – taxes.
A CPA manages your books, offers accounting consultancy, and reduces your tax liabilities. Hiring one will save you time, frustration, and money so that you can focus on more important activities.
Read on to learn more about what CPAs can do for you and how much they cost.
What Does a CPA Do?
A CPA, a certified public accountant, is responsible for recording and interpreting financing information. They do all the financial planning and bookkeeping and prepare financial documents like profit-and-loss statements and tax returns.
A CPA must meet their residential state’s experience and educational requirements and pass the state’s Uniform CPA exam.
Small Business Accounting
Small business accounting is the process of recording, tracking, and analyzing the financial transactions within your organization. It involves putting together a comprehensive statement that explains the profitability of your business.
There are many moving parts to small business accounting, including:
- Bookkeeping: This is the process of recording transactions in your business accounts. Bookkeeping provides all the source material that will later be used to generate financial statements. MI Tax CPA can help you perform the bookkeeping and manage your finances in software like Quickbooks. Some examples of bookkeeping include recording transactions, documenting and filing receipts, and reviewing bills from vendors.
- Payroll Management: This is similar to bookkeeping, except you’ll need to record and organize the organization’s employee financial data. The goal of payroll management is to assist the company in making timely employment payments. It also determined allied factors, including insurance, social security, and income tax. MI Tax CPA can help you lay the groundwork for payroll by setting up your direct depositing system and generating tax reports.
- Accounting Systems: Accounting systems are necessary to help make your bookkeeping and accounting tasks efficient. Quickbooks is a popular accounting software with extensive features like bill processing, credit card processing, and reporting. Unfortunately, there’s a steep learning curve, requiring training and resources to use it effectively. We help set up your Quickbooks account and implement these accounting systems.
Financial statements summarize a company’s financial conditions over a set period, such as quarterly, bi-annually, or yearly. The primary components of the financial statement are the balance sheet, income statement, and cash flow statement.
A balance sheet shows the owner’s equity after subtracting liabilities, an income statement shows profit and loss, and a cash flow statement reflects how much revenue is coming into the business.
Financial statements are critical in making business decisions and preparing a budget. Any budget planning requires historical financial statements combined with a revenue forecast. This allows you to decide how you’d like to grow your company, what areas need improvement, and so on.
Lenders also review your financial statements to assess the health of your business. They’ll look at indicators like your inventory turnover, profits, and the aging of receivables.
MI Tax CPA helps prepare accurate financial statements for you so that investors, creditors, and shareholders have complete confidence in your organization. For example, if you sell or own a cannabis business, Section 701 requires you to submit financial statements. We create cannabis financial statements to ensure you comply with Michigan regulations and tax laws.
Tax Preparation & Planning
If there’s an audit or problem with your taxes, CPAs can help deal with the IRS and answer any questions a local or state tax board may have. They also advise you on how to reduce your tax burden throughout the year, ensuring there won’t be any audits or questions from the local or state authorities.
CPAs guide their clients through a full range of tax preparation and planning decisions with strategies to maximize cash flow, keep you on track with your financial goals, and minimize tax liabilities.
MI Tax CPA will offload the work by ensuring that all possibilities have been exhausted so you get the highest return on the taxes you’ve paid. Many aspects go into tax preparation and planning, such as:
- Prepare and file tax returns (both individual and business) for local, state, and federal requirements, including partnerships, sole proprietorships, Limited Liability Companies (LLC), and corporations.
- Maximize tax deductions and credits such as R&D tax credit
- Assist with IRS and state tax audits
- Consult on mergers and acquisitions, fiduciary income tax, business restructuring, state tax matters, and wealth transfer planning
- Offer tax planning for corporate executives, such as long-term incentive compensation planning and stock option.
The benefits of tax planning depend on whether you’re an individual or a business. As an individual, tax planning may include maximizing deductions, strategic charitable giving, timing contributions to IRAs, planning for asset transfers, and more.
CPAs help businesses by devising advantageous tax strategies, preparing for payroll taxes, and identifying potential tax deductions and credits.
A CPA can manage a company’s daily financial operations and offer strategic and long-range planning. This may include financial planning, cash management, budgeting, coordinating risk management and insurance, preparing financial statements for shareholders, helping with estate planning, and providing investment advice.
Hiring a CPA is a top priority if you’re starting a business. You want a dependable tax advisor to help keep your money in order. When your CPA understands your company vision and finances, they can help you efficiently allocate resources for hiring and other infrastructure needed to scale your organization. As advisors, they help you budget your capital for new roles and guide you to making more fiscally responsible decisions.
A great CPA provides wisdom about a wide range of topics affecting a business’s future and finance. They can identify potential financial weaknesses that threaten their company’s future, allowing them to develop strategies to support the business’s growth and strengthen its position. CPAs offer expert consultation that makes a business more profitable going forward, like implementing efficient accounting systems like cash flow projections and quarterly reporting.
Forensic accounting involves CPAs using investigative and auditing skills to examine the finances of a business or individual. These accountants search for evidence of crimes and typically work for financial institutions, law enforcement agencies, and insurance companies.
Forensic accountants investigate financial accounts and records that could be used as legal evidence in court cases. They work on cases like embezzlement and fraud and explain the nature of the crime in court.
Let’s take a closer look at the common types of crimes that forensic accounting can help uncover:
- Fraud: Fraud typically involves an employee or organization that attempts to deceive another. For example, a hedge fund might not reveal the actual value of its fund, or a business committing tax fraud by not showing how much it truly earned.
- Money laundering: A business or person earning money by committing prohibited or illegal activities. It could be a business that transfers illegally obtained funds to a nonprofit organization to give the appearance of legitimacy.
- Embezzlement: Embezzlement can involve an employee who transfers funds from the payroll to a personal account.
If your business partner is ripping you off or money is disappearing from your accounts, a CPA can get to the bottom of what’s happening.
Frequently Asked Questions
Below are the most frequently asked questions about CPAs:
What’s the cost of hiring a CPA?
The cost to hire a CPA varies based on the CPA fee schedule, which each certified public accountant determines for themselves. However, the average hourly rate for accountants is typically between $160 and $450.
Many factors affect the cost of hiring a CPA, such as their qualifications and experience, your tax filing situation, geographic location, and how the CPAs structure their fees.
Is Hiring a CPA Worth It?
Yes, hiring a CPA is entirely worth it. Taxes can be overwhelming for any business owner in a complex financial situation who need help understanding the ins and outs of the tax code.
Filing your taxes properly will allow you to avoid the wrath of tax regulators. CPAs ensure you’re maximizing tax deductibles to prevent losing capital that could be used to fuel growth. A trusted CPA who’s spent thousands of hours learning tax code ensures you aren’t making vital mistakes, saving you lots of money in the long run.
Furthermore, the IRS performs random audits of businesses. Many business owners simply hope their company won’t be targeted. However, a CPA can pinpoint issues before tax regulators pounce on them.
Whether you’re an individual or a business owner, a CPA helps deal with existing financial issues as they arise. They can futureproof your financials, ensuring you and your company are secure. The money it’ll cost to hire a CPA is worth the cost of saving financial headaches and the time it’ll take to do all these tasks yourself.
Need CPA Services? Contact Us!
Your CPA provides benefits well beyond just tax preparation services. If you’re only seeing your CPA in the spring or don’t have an accountant, it’s time to rethink your approach to managing finances.
Your CPA’s guidance can be a powerful resource to tap into as your work to maximize your wealth and navigate financial challenges.
From small business accounting and financial statements to tax preparation and planning, a reliable accounting firm like MI Tax CPA can save you the hassle of figuring it out all on your own and minimize the risks of IRS audits.
Our team of expert CPAs works together to provide our clients, including the cannabis industry, with a full range of financial services. Get in touch with MI Tax CPA, and let us help you protect your assets and plan for a better tomorrow!