The Informal Financial Partnership for Business Success
Depending on your type of business and your products or services, you may work often with repeat customers, either B2C or B2B. The smart business owner, especially those working with business customers, courts their business. They want to keep the customer and grow their sales as their customers’ businesses grow over time. Keeping that relationship alive and thriving is good for both.
If you think about it, the relationship between a CPA and their business customers is very much the same. The CPA has a vested interest in helping their business owner customers to grow and prosper. What may begin as simple once-a-year tax return preparation can grow to support and consulting over time. For a small business owner, especially the solo entrepreneur who is hesitant to set up a relationship with a CPA due to cost, perhaps cost should be secondary to value in the relationship.
Accountant or CPA?
One estimate of accountants and CPAs nationwide states that of 1.3 million accountants in the U.S., about half, or 650,000 are Certified Public Accountantsi. They are certified and licensed by the states, with requirements and education required above the requirements for regular accountants. Also, the IRS says: “A CPA who is not under suspension or disbarred from practicing before the IRS and is duly qualified to practice as a CPA in any state may practice before the IRS.” Services of CPAs include:
- Tax advice & planning
- Forensic accounting
- Audit and audit prevention
- Consulting and management
Though more expensive than a regular accountant, the cost is usually worth it over time.
Working with a CPA Over Time to Grow Your Business
Even if you are just starting out and do not need CPA services ongoing, you could find great value in just paying for some time to discuss business entities and what could be best for your business now and in the future. You could discuss the different business structures, one for now, and possibly needing to change as you grow:
- Sole proprietorship
- Limited Liability Company (LLC)
Each has pros and cons and changing later is not always easy. Talking about it and planning early can have you making the right business decisions along the way.
Should you use your personal vehicle or buy one dedicated to the business? What recordkeeping is required by the IRS for each? If you are acquiring a vehicle or more in the future, is leasing better than buying? If you need special equipment or high dollar office items, is it better to buy or lease? If you are buying, what should you do about depreciation? You should get advice based on your current business profitability and tax situation. Depreciation can be used to move deductions into tax years where they are more beneficial.
Your business can be a long-term funding tool for your retirement. Your CPA can advise from investment and taxation perspectives for current tax benefits and future retirement security.
No matter how much you prepare and how careful you are, the IRS is known to question perfectly valid deductions through audits. The involved CPA will be ready and approved to represent you before the IRS.
A long-term relationship with a CPA can help a business from the startup stage, through growth, and for future planning. Business owners have found, sometimes too late, that the costs of this informal partnership can be far lower than waiting.