Should i hire a cpa

Ross refused to hire a tax professional for years, assuming that paying someone else to prepare his return would be a waste of money. Your opportunities for saving on your taxes will depend on your situation and how complex it is. But if your situation is more complicated, working with a professional who has intimate knowledge of the tax code could result in serious savings. A good tax pro can do more than beef up your bottom line.

By building a relationship with your accountant, you can help your accountant get to know you and your unique situation. In turn, they can take charge of small tasks, such as prompting you to send in relevant documentation for a deduction, or remind you to adjust your withholdings. Having an expert look out for you during tax season and beyond can give you priceless peace of mind. Cozette White, CEO of the financial consulting firm My Financial Home , told us in an interview that she recommended asking for referrals from a bank, financial advisor, insurance agent, or business contacts.

She said that professional referrals usually mean the accountant has a good reputation, so get the names of two or three tax pros from your network. You can then narrow down that list by checking credentials and interviewing your candidates. The IRS maintains a public directory of PTIN holders who also hold professional credentials such as Certified Public Accountant CPA or Enrolled Agent EA ; the directory also includes attorneys who specialize in tax preparation and planning, as well as preparers who voluntarily complete a continuing-education program each year.

Cozette M. You own rental property. You have foreign accounts or investments or are an active stock trader. When you should prepare your own tax return When you should hire a tax professional How to hire a tax professional Sources. When you should prepare your own tax return. Your tax situation is simple. When you should hire a tax professional. You have foreign bank accounts, investments, or income. You made mistakes on a prior-year return or are being audited. You want to save money potentially.

How to hire a tax professional. Here are a few ideas on what to ask during the interview:. Once you've done that, then you can find the right CPA or firm that can handle it all. Remember, revenue alone doesn't always determine your business's accounting needs. If you own a high-end art gallery that sells just a few paintings per month, you might be making big money, but you don't have the volume of transactions that would require full-time accounting help.

If you have an auto repair shop with a lot of purchases and inventory to keep up with every day, you may need a more comprehensive service from a CPA. A CPA or firm can review your business's financial health.

Ideally, you want to get key health indicators such as gross profit margin, aging accounts receivable, net profit, etc. There's a reason why CPAs go to college and take a grueling exam—accounting is a specialty profession. An experienced CPA understands the process and can execute it error-free, which is crucial because errors mean negative monetary impact on your business.

If you have no experience in accounting, it may be better to leave it to the professionals. You might be thinking that handling your accounting and finances yourself will save your business money , when in fact it could do just the opposite. Do yourself a favor and consider hiring some help. As a business owner, you shouldn't be spending your time figuring out accounting software and data entry when you could be using that time to focus on the bigger picture: building your business.

Read more articles on accounting. The information contained herein is for generalized informational and educational purposes only and does not constitute investment, financial, tax, legal or other professional advice on any subject matter. Therefore, seek such advice in connection with any specific situation, as necessary. American Express makes no representation as to, and is not responsible for, the accuracy, timeliness, completeness or reliability of any such opinion, advice or statement made herein.

Skip to content. Business Cards. Payment Solutions. For instance, if you run an e-commerce business, then your accountant should have experience with serving online companies. If you're friendly with other business owners in your area, ask them for recommendations. The best place to start is a local networking group. Before you hire anyone, use the CPA Verify tool to check that individual's certification status to ensure they are up to date with their requirements.

By doing your due diligence, you will have the best chance of hiring a highly qualified CPA. Lori Fairbanks and Matt D'Angelo contributed to the writing and research in this article. Jamie Johnson. From choosing a business structure that helps you save the most money on taxes to providing advice on a major business move, there are key times when your small business needs a CPA.

CPAs are accountants who are tax experts. Before you start your business, you should meet with a CPA for tax advice on which business structure will save you money and the accounting method you should use. This article is for small business owners who want to know when they should seek services from a CPA. What is a CPA? CPA vs. What does a CPA do? These are the general responsibilities you can expect from a CPA: Tax filing, planning and advice: CPAs are qualified to handle all of your business tax needs, including year-round recordkeeping and filing tax extensions with the IRS.

Tax and financial compliance: If you are audited, CPAs can reduce the cost of audit findings by negotiating with the IRS on your behalf. Because of their extensive knowledge, CPAs can catch financial and tax problems before they become an issue, thus preventing an audit. Consulting: CPAs can assist you with important financial decisions, budgets, financial risk managemen t problems, and other financial services.

They can also provide valuable advice on complicated financial matters. Forensic accounting: CPAs can help monitor your books and prevent fraud. Payroll: If you're not already using top payroll software , CPAs can set your business up with a platform that works for your company. Bookkeeping: CPAs are qualified to help you create, maintain and review financial books throughout your business lifecycle.

What's the average cost of hiring a CPA? When you should hire a CPA? These are times you should consider hiring a CPA: 1. Before you start your business When you're launching a business and money is tight, the idea of paying hundreds of dollars for a few hours with a CPA may seem extravagant.

These are some of the decisions a CPA can assist you with as you get your business up and running: Your business structure: CPAs can recommend the best business structure for your company. The legal structure you use to set up your business — sole proprietorship, partnership, LLC, corporation or co-op — affects your taxes, liability and reporting requirements. It can also be difficult to change later on, possibly requiring you to reapply for licenses, get a new employer identification number, or notify your bank and insurance company.

Your accounting practice: A CPA will help you determine whether cash or accrual accounting is the best fit for your business. When you're setting up your accounting software, one of the first questions it asks is which type of accounting you use. Generally, new businesses use cash accounting — as it's simpler — but there are instances when the IRS requires accrual accounting, such as if you sell goods to consumers and maintain an inventory. The alternative is the accrual method — recording income and expenses when they're billed rather than when you receive the money.

Tax time CPAs can prepare tax documents, file tax returns, and strategize ways to minimize your tax liability for the following year. These are other ways CPAs can assist you with your taxes: Compliance with tax laws: CPAs help you understand and comply with tax changes. When the tax code changes, such as it did with the Tax Cuts and Jobs Act , a CPA can help you understand if and how the changes affect your business. Appropriate deductions: CPAs help you understand which deductions you qualify for.

While you want to take as many deductions as you're entitled to, you also don't want to make questionable deductions that may trigger an audit. A CPA can help you decide when you should — or shouldn't — take certain deductions. These are some instances when you might need a CPA's advice: You're starting a business and need to know which startup costs are deductible. Your business started as a hobby and you want to know how the IRS will classify your company.

Your home and small business intermingle, and you're not sure which expenses are deductible.