Frequently Asked Questions
I have a tax preparer, what can a CPA do that a general tax preparer can’t?
Any Joe off of the street can prepare your taxes. The IRS has helped the American people in recent years by requiring all tax professionals to get a Preparer Tax ID Number, or PTIN. This does not require a qualified exam or background check at the moment.
However, in the state of Florida, a CPA has several requirements to become a CPA. A CPA must pass a rigorous exam, similar to the bar exam; take 150 qualified semester hours, which basically is a Masters Degree; take 36 semester hours of upper level accounting classes (including Taxation, Auditing, Financial, Cost/Managerial and Accounting Information Systems); and 39 semester hours of general business including business law and ethics. CPAs must also have minimum work experience to become licensed. A CPA must take a minimum of 80 hours of continuing professional education in various areas, including business ethics. This means while your tax preparer is on the beach over the summer, a CPA is learning about all of the tax law changes and updates to better serve you in the upcoming tax season.
I just started a small business, why should I hire a bookkeeper?
The perfect time to hire professional bookkeeper, with a background in taxation, is at the beginning. You wouldn’t build a house and then try to lay the foundation afterwards. It’s the same with your accounting system. Have you ever heard the term growing pains? The struggles a business owner experiences when they make the wrong decisions in the beginning which causes agony in the future when it all could have been avoided with the right start.
A good bookkeeper is a great asset to a small business owner. However, a bad bookkeeper can cost you time and money. Tax preparers may charge you an arm and a leg to straighten out your books. The IRS or state departments can disallow deductions if your records are insufficient and will charge outrageous penalties and interest on top of the disallowed difference.
Mistakes in your bookkeeping are better if caught early. Duplicate checks can drain your bank account and missed payments may cause issues with vendors. Late payment charges from vendors can add up. Tracking assets is also important. Revenue recognition can also make a huge difference in your tax payments. Timely and accurate books can make payroll and income taxes easier and timely, avoiding penalties and interest on late or inaccurate filings.
Some small businesses attempt to work on their books themselves; many run into problems. Expense classification, revenue recognition, book-to-tax differences, and many other questions can be answered by a knowledgeable bookkeeper. Additionally bookkeepers can assist with a number of other business functions and can point you in the right direction on many questions you have.
Outsourcing the bookkeeping function allows small business owners to focus on business operations and reduces stress. It allows business owners to return to their field of expertise and receive thepeace of mind that the books will be handled properly, with a qualified bookkeeper. Small business owners waste precious time on bookkeeping themselves, they may neglect other business functions and let great growth opportunities pass them by.
Good bookkeepers give timely and reliable financial information which allows business owners to make informed management decisions. This may allow the business owner to take advantage of growth opportunities. Easy to follow profit and loss statements and balance sheets may significantly reduce your tax preparation bill.
A great bookkeeper has knowledge of and experience in every aspect of the accounting world and can point out opportunities; such as tax planning, specific tax credits, moneys owed, or business strategiesyou are not aware of that can save you time and money. I take yearly continuing education classes to stay up-to-date on current GAAP and tax issues facing business owner.
Even more important than taxable income, to a small business, is cash flow. You may be making sales left and right and still by strapped for cash. It may make the difference in the company’s survival. Understanding how to make cash flow work for your business can turn around a sinking business.
- You have no clue what you’re doing. (You think you do, but trust me you don’t)
- Help you track why you have no money left in the account.
- You’re not organized. (You can just empty your pockets on your office desk)
- You don’t remember what you did yesterday, never mind last week.
- Bills get paid on time and brings creditability to your customers. (Save on late fees)
- There is someone between you and the bill collector. (That alone is worth it!)
- You don’t know what your accountant is talking about.
- You may know how but you’re not interested. (I agree, it can be pretty boring)
- You actually know how much money you have in the bank. (No it’s not your ATM balance)
- You just don’t have the time.
BONUS REASON: You have other stuff to do (personally or professionally)
Resources & Articles To Get The Most Out Of Your Finances
How to Prepare for Tax Season 2023
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5 Tips to Maximize Your Tax Return
Are you looking for tips to maximize your tax return or how to get more money back on taxes? Handling taxes can be a stressful and sometimes confusing process, but with the right preparation, you’ll be able to maximize your savings and reduce your stress levels! In...
How to Choose The Right CPA for Your Tax Needs?
Want to know how to choose a good CPA? Choosing a certified public accountant to handle your business's taxes can be challenging. After all, you want someone who is knowledgeable, experienced, and qualified to manage and navigate the complexities of tax laws. ...