When to hire a CPA for your small business

Running a small business is not for the faint of heart. Regardless of the size or complexity, there’s a lot to consider. As a small business owner, you must manage marketing, inventory, customer service, and many other things.

Not least among your concerns is business tax. However, they aren’t always complicated, and some small business owners can handle them independently. But how do you know when to go it alone or seek help from a Certified Public Accountant?

Check out the guide below for when to consider hiring a CPA.

When you need a trusted business partner

A common misunderstanding is that CPAs only help businesses avoid paying too much (or too little) tax. But that is just part of the equation. A CPA can act as a trusted strategic business partner from the inception of your small business and throughout its lifecycle.

Also, a CPA can help you develop a tax plan before you launch a business and can help determine if it should be on a cash or accrual accounting system.

Help with those decisions means you’ll have a solid foundation for an overarching financial strategy. This improves your chances of success. And once your business is launched, you can lean on a CPA for advice on various business questions that can impact your bottom line. Of course, they will also ensure quarterly taxes are paid.

Finally, if you run into an IRS audit, a CPA can represent you.

All this is based on the CPA’s fiduciary responsibility toward their clients, meaning they must always act in your best interests or risk losing their license.

Think about a CPA when taking business complexity and opportunity costs into consideration

Not every small business needs a CPA. Some are structured very simply, and owners have the time, energy, and knowledge to handle their taxes. But suppose your business has lots of depreciating assets or qualifies for several types of deductions. In that case, the financial waters can muddy very quickly.

Then it’s time to ask yourself some very pointed questions. Do you have the time to keep us with taxes monthly and pay them quarterly? Do you have the knowledge of current tax laws to ensure you are not paying too much or risking an IRS audit? Do you have time to keep up with the mercurial U.S. tax laws and still run your business effectively?

If the answer to those questions is “no,” that is a pretty good indicator. It is time to see if opportunity costs outweigh what it would take to hire a CPA.

Significant structural changes might require a CPA

If you acquire another business, merge with one, sell one or simply close one, then you’ve probably entered a realm of complexity where a CPA can help.

A CPA can help you verify the value of another business you may want to buy. Conversely, they can help you accurately determine the value of yours if you decide to sell it.

You may pay too much for a business without a CPA or sell yours for too little.

The upshot is that you may not ever need a CPA, but you should never discount seeking the services of one entirely. CPAs can be used strategically or tactically, and it’s good to know your options when the time comes.