It Might Be Time To Hire a Small Business CPA

Many small business owners use accounting software or a bookkeeper to manage their finances. These solutions can often handle your day-to-day transactions and basic reporting needs, especially in the earlier stages of your company’s development. But they may not be enough as your business grows. 

As your company scales, your finances get more complex, often requiring deeper expertise and more robust support. That’s when a good Certified Public Accountant (CPA) becomes invaluable. 

Let’s explore how to determine whether you need a small business CPA, what they can offer your company, and how to find the right one for you.

What Is a Small Business CPA?

A CPA is a licensed accounting professional who has satisfied extensive educational, experiential and testing requirements established by regulatory agencies, such as the American Institute of Certified Public Accountants (AICPA).

While non-licensed professionals can offer tax preparation and bookkeeping, only a CPA can offer audit and assurance services. As a result, you can generally expect them to have more advanced knowledge and experience than a standard accountant.

Typically, CPAs work for small businesses in an outsourced capacity. Some operate as solo practitioners, but many work within small firms—similar to a law office—alongside a team of accountants and other professionals to support them and their clients.

CPAs typically specialize in services like the following for various niches or types of businesses:

• Tax preparation, compliance and strategy
• Compilations, reviews and auditing
• Fractional CFO and strategic advisory

The benefit of working with a CPA is that you often receive greater expertise than you could afford to hire in-house. CPAs tend to charge a flat fee for their services, making them surprisingly cost-effective if you use them wisely.

Accounting Software, a Bookkeeper or a CPA: What’s the Difference?

Small business owners typically rely on some combination of three solutions to manage their financial reporting: accounting software, bookkeepers and CPAs. Each has its own advantages, disadvantages and ideal use cases.

Accounting software is the cheapest and most readily available of the three. It’s a major step up from spreadsheets—or worse, pen and paper—for tracking your business’s transactions and provides a foundation for your financial management processes.

However, no software is self-sufficient. If it’s your only solution, you’ll need to handle certain bookkeeping and accounting tasks yourself, which can quickly become burdensome on top of your other responsibilities.

Small business owners often start to consider hiring a bookkeeper when that gets to be too much. Their services are significantly less expensive than a CPA’s, and they’ll be able to take over routine tasks like:

• Categorizing transactions
• Reconciling accounts
• Running payroll
• Building financial statements

However, bookkeeping services are typically limited to these kinds of record-keeping responsibilities. When your business needs more advanced tax, accounting or advisory assistance, you’ll usually require a CPA.

How Small Businesses Benefit From CPA Expertise

Hiring a CPA may seem like an intimidating investment, but in many cases, they provide more than enough value to pay for themselves. Their services can significantly improve your bottom line, year after year. Consider the following ways a CPA can help your small business. 

Tax Preparation and Strategy

Preparing your own business taxes isn’t just time-consuming, it can also be risky. Mistakes can cause you to trigger costly penalties or leave money on the table by failing to take full advantage of allowable tax deductions or credits.

Not only can an experienced tax CPA ensure your return is accurate, but they can also develop a strategy to reduce your tax burden while complying with regulations and minimizing your chances of an audit.

If you do face an audit, a CPA can also communicate with the Internal Revenue Service (IRS) and state tax agencies on your behalf, guide you through the process, and help resolve any issues efficiently.

Advanced Accounting and Assurance Services

Bookkeepers can generate financial statements, but they may not have the expertise necessary to handle the more complex aspects of your financial reporting, especially if your business follows accrual accounting or GAAP.

CPAs can help ensure your financial statements are accurate and compliant with accounting standards, which is particularly important when you’re pursuing financing and need to pitch to prospective investors or lenders.

Additionally, if your business ever requires a formal review or audit, only a CPA has the authority to perform those assurance services, lending that extra credibility to your financial reporting.

Strategic Financial Advisory

CPAs are increasingly offering strategic financial guidance to help small businesses grow. For example, they can help with functions like cash flow management, budget planning and financial modeling.

By analyzing financial trends and identifying opportunities, CPAs can deliver data-driven strategies that go beyond surface-level accounting insights, helping you maximize efficiency and long-term profitability.

Five Signs It’s Time To Hire a CPA 

It’s rarely a bad idea to hire a CPA for your small business. Many business owners can benefit from their expertise as early as the formation stage. They can help with business structuring and tax planning from day one, setting you up for long-term success.

However, if you’ve been delaying the investment, here are five signs it may be time for you to bring in a CPA:

1. Scaling past $1M+ in revenue: As your business grows, so does your financial complexity. Past a certain size, partnering with a CPA is essential for optimizing your tax strategy and long-term financial planning.
2. Preparing for fundraising: Whether you’re seeking a bank loan or investor funding, CPA-reviewed financial statements increase your credibility. They can also help you negotiate a more favorable deal.
3. Dealing with complex business structures: Entity structures like corporations and limited liability companies can provide lucrative tax opportunities, but careful planning is necessary to avoid compliance issues and maximize savings.
4. Having tax compliance issues: If you’ve received a confusing letter or audit notice from federal or state tax agencies, a CPA can provide invaluable assistance in resolving the situation.
5. Spending too much time on accounting: If bookkeeping, tax preparation or financial planning are pulling you away from running your business, hiring a CPA can help you get your time back.

How To Find the Best CPA for Your Small Business

Hiring a CPA for a small business can make a significant difference in your business’s financial health. Cost is a factor to consider, but your primary focus should be on finding someone who can help your business grow.

Here are some items to consider when looking for the best CPA for your small business:

• Prioritize relevant experience. Whether you run a retail store or a professional services firm, look for CPAs who understand the unique tax and financial considerations of your business’s size, industry or vertical.
• Schedule consultations and ask questions. Most CPAs offer free consultations, which is your chance to gauge their expertise and communication style. Dig into their experience with businesses like yours, their approach to tax planning, and how they assist clients with financial decision-making.
• Consider cost, but focus on ROI. CPAs cost more than bookkeepers or DIY software, but the right one can save you money in the long run by preventing costly mistakes, securing tax savings and optimizing your financial strategy. Look at prices, but focus on finding expertise that will help your business grow.

Find Your Accounting Partner Through Paro

One of the most efficient ways to find the right CPA for your business is through Paro. Our AI-driven platform matches you with carefully vetted accounting professionals who can provide flexible support on a fractional basis.

The CPAs in our network are more than just tax preparers. They’re strategic advisors with proven skills in financial reporting, tax optimization and business planning, and Paro can help you find one with experience in your industry.

Don’t wait until you’re scrambling to meet a tax deadline or preparing last-minute financials for an investor pitch. Get started with Paro today to connect with a top-tier CPA and position your business for success.