Why a Small Business and Start-up Companies Should Have a CPA

Accountants can assist with all stages of your business. Most entrepreneurs don’t realize the value a CPA can add to their business; accountants are not just for preparing payroll and tax returns!

From the Beginning

It is a good idea to have an accountant even in the very beginning when you are establishing a business plan. An accountant can help with financial projections and reports that will help create a reasonable business plan that is more likely to succeed.  There are also several business entities that you must weed through to decide which format best meets the needs of your small business.  Should you be an LLC, Partnership, Corporation, or remain a Sole Proprietor? An accountant can help highlight the benefits and disadvantages of each in regards to your personal liability and company’s objectives. Once an entity type has been selected, an accountant can make sure all the necessary forms are completed and filed to help make sure you are legal to operate your business at all levels: local, state, and federal.

Through the Years

When you decided to start a business, you were undoubtedly hoping to be in operation for more than just a year.  An accountant can be of constant assistance as your small business expands and legal requirements change over the years.  Many small businesses don’t have a financial department to help review progress and as you have probably quickly realized, the day to day operations consume more hours than you ever imagined.   You can relieve some of your stress by handing over the financial aspects of the business to a trusted and knowledgeable CPA.  An accountant can help year round with budgeting, forecasting, and keeping accurate records.  Information such as adequate gross margins, profit/loss by job, and cash flow are examples of vital reports that should be monitored and could be the difference between success and failure for most businesses.

At some point during your business, there might come a time when you need to borrow money.  It might be to cover unexpected expenses, purchase new assets, or maybe even to buy another company. Having a CPA on board is very beneficial when applying for loans. When banks lend money, they are most interested in getting their money back.  Lenders will often require a compilation before considering you as a candidate for a loan or line of credit.  They recognize your association with a CPA as a sign that you take your business seriously and know if they have additional financial concerns, they can address them with your CPA.

The laws that govern business are constantly changing to meet the needs of new and evolving businesses.  How can you possibly be expected to keep on top of all the laws associated with adequate record keeping in addition to laws that are just for your industry?  An accountant, can help keep you informed of laws that require you to make changes in record keeping, methods of depreciation, new tax laws, and forms that need to be filed.  If you do business with the federal government, then DCAA  rules for financial reporting must be followed or you could risk being in violation with your contracts.  Did you know that if you plan to take business deductions for travel, entertainment, or gifts that there are additional requirements for records that must be kept?  The burden of proof falls on the small business owner, but a CPA can help ensure that you have the documentation you need to substantiate your income and expense claims.

In the End

Someday, hopefully after years of success, there will come a time when you might want to sell your business.  Who else but your CPA, who has been your closest financial adviser for an extended period of time and throughout various business conditions, could help you decide the value of your business in the current market place?  A CPA can help negotiate what you want when selling your business and let you know if your expectations are realistic and practical. It will also be important to have an accountant after the sale of your business to financially ease you into your new situation.

At Cheryl Jefferson & Associates, our team of professionals are ready to navigate you through and over all the hurdles of the changing financial world that you encounter as a business owner.  Please contact us at Cheryl Jefferson and Associates  to find out how we can assist you in setting up a business for success.


small business

Contributed by Elizabeth A Wells