Many Americans take advantage of online tax platforms and do the heavy lifting themselves. But when your situation is a bit more complicated, you need a certified public accountant (CPA)
- Top 7 reasons to hire an accountant:
- You’re starting a business
- You need small business tax planning help
- You’re self-employed
- You need to free up time
- You’re facing an audit
- You need help with deductions
- You’re applying for a business loan or grant
Sometimes, you need more assistance than just using an online tax website to submit your tax return. Tax planning should be an ongoing consideration throughout the entire year, not just in April. This is especially true if you’re starting or running a business or are otherwise a self-employed worker.
There are many credits and deductions you may not fully understand as a business owner, or you may need to pay quarterly taxes and are unsure how to start. Whenever you have uncertainty about taxes, you should work with an accountant—and ideally, a certified public accountant (CPA). You never want to miss something that could help you save money or put you at risk of an audit or other legal issue.
Let’s walk through seven common reasons to hire a CPA:
1. You’re starting a business
There are many crucial tax considerations when starting a business. One major factor is the type of legal business structure you set up. For example, sole proprietorships, partnerships, LLCs, and corporations all have different tax implications. An accountant can help you figure out which structure will give you the most benefits based on your current and long-term business goals.
2. You need small business tax planning help
Even after a small business is set up, you will need an ongoing tax planning strategy. It’s not enough to only think about taxes once a year. You may need to incorporate business planning and financial software to help keep track of cash flow and tax obligations. If you’re seeking funding, you’ll need to create a balance sheet, a business model, and other documents that a professional can help you with.
3. You’re self-employed
There are many benefits to working for yourself as a sole proprietor. You don’t have to worry about creating certain legal structures and other requirements that some small businesses have.
However, independent contractors have unique tax obligations since they’re not working for a traditional employer. You’ll have to pay quarterly estimated taxes in addition to your tax return. Especially if you’re just starting out in the self-employment realm, working with an accountant will help you understand the tax obligations and how to comply with them.
4. You need to free up time
Running a small business brings many responsibilities, and taxes are just one piece to the overall puzzle. You must manage daily operations, vendors, employees, customers, cash flow, and products, and you may no longer have time for bookkeeping and accounting. If this is the case, hire an accountant who can step in and take on many of these tasks.
5. You’re facing an IRS audit
Of course, some businesses end up facing audits from the IRS. This could happen for a variety of reasons, including itemizing lots of deductions, profits skyrocketin from one year to the next, making an error on a tax return, or running a cash business. If you’re dealing with an audit, hire an accountant to help you through the process. You don’t want to face these issues alone, and they can be resolved much quicker with the right help by your side.
6. You need help with deductions
One major step that gets more complex in small business taxes is claiming deductions. You can significantly lower your taxable income and thus your tax burden when taking all of the deductions you’re eligible for. Deductions include eligible business expenses like equipment purchases, office expenses, bills, meals, and others.
Additionally, there may be other deductions you qualify for, like the Qualified Business Income Deduction, which you can use to deduct up to 20% of business income if eligible. You don’t want to miss any of them when doing a tax return. An accountant will make sure you don’t overpay and claim all applicable deductions.
7. You’re applying for a business loan or grant
If you need a business loan or grant, an accountant can help. These applications can be tricky, and you want to be sure you put your best foot forward. Especially if it’s a new business, an accountant can help you understand the options and how to establish creditworthiness. They can tell you about funding options that you may not be aware of. And they can make sure that applications are always strong and information is presented clearly and accurately.
Why work with Provident CPA and Business Advisors?
If any of these situations apply to you, it’s time to hire an accountant. And the “certified” in certified public accountant means an individual has passed educational, work, and testing requirements that signal their competence in the field.
Running your own business requires that you maintain the right strategy for taxes, and you can’t always do it on your own. Make sure you claim all applicable deductions and are reporting everything accurately.
The team at Provident CPA and Business Advisors is here to help, no matter what stage your small business is in. We help with business formation and planning, tax planning, and tax minimization.
Contact our team of experienced professionals today to get started.