5 Ways a CPA can help Small Business

 

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Small Business Owners, particularly in the early stages, are doing it all.

Sometimes it can feel like an up hill battle. There is so much to do, and learn, and not enough time to do it. Financial resources can be scarce and stretched thin.

Sometimes spending a little can help you a lot. The value is apparent.

What We Do:

CPA’s do much more than crunch numbers and report on facts that have already happened in your financial statements.

CPA’s provide advice. We educate our clients and help them improve their financial business results.

Our value can often be quantified, measured, seen and/or felt by business owners.

CPA’s provide a wide variety of services.

I enjoy helping small business owners with income tax and with all the detail that includes. I understand almost no one likes tax; however, we all like to save money. For me, using IRS rules to help others is fun.

How We Help:

1.  A CPA  can help prevent “Blind Spots”:

What you don’t know can hurt you. I’m not telling you this to scare you. Rather, to educate you and provide an objective example.

Many new Small Business Owners do not know that the IRS expects them to pay tax as the money is earned and that quarterly reporting and payments are required if you expect to owe more than $1,000 annual tax to the IRS.

This means that you need to keep your accounting records current so you can determine if you need to begin quarterly reporting and payments. 

2.  A CPA can help with your Budget:

  • Self-Employment tax of 15.30% is required on all Annual Net Earnings of more than $400
  • The 2015 SE tax rate on Net Earnings is 15.3: (12.4% social security tax and 2.9% Medicare tax)
  • Do you include this expense in your budget so you have cash when it is time to pay the IRS?

 

3.  A CPA can help you make Decisions:

  • Data (information) can be used to help you make cost effective decisions
  • Review Forecasted to Actual Financial results – what happened?
  • Help a business owner interpret the financial statements and offer suggestions to improve profitability, cash flow, and efficiency

 

4.  A CPA can help you Minimize your Income Tax:

  • Do you know what you can legally deduct on your tax return?
  • Do you know how to use strategy to reduce your business tax bill?
  • Tax Planning includes education, evaluation, and action

 

5.  CPA can help you improve Profitability:

  • When I told an architect that they were required to pay Self-Employment tax, they were shocked. They told me, I have to raise my prices immediately. I am not making any money.
  • We can help you determine if your pricing is profitable or if you are working for free or for not as much money as you thought you were making
  • You don’t want to wait until year-end to find out
  • As we all know, time is money and the faster we can earn it and build a financial cushion, the more comfortable we feel

 

You have 3 choices:

  1. Do it yourself – inexpensive, but can be costly
  2. Do it for me – expensive & might be seen as a luxury until the cash starts coming in – consistently
  3. Do Some of it for me: a cost effective bridge to obtain education and help on a “as needed” basis

 

Thanks for reading,

Deb

Call me about an Accounting & Tax Tip Cheatsheet  619-549-2717

 

Deborah Ann Fox, CPA helps Small Business Owners & Individuals build and protect their financial wealth. She can help by being your financial compass while you captain your ship.

Debbie offers free 30 minute no obligation consultations. We can discuss/resolve via a mix of e-mail, phone, virtual, and in-person communications.

http://www.debfoxfinancial.com

Call 619-549-2717

E-Mail me @ debfoxfinancial@gmail.com 

Twitter: @debfoxfinancial

Facebook: Deborah Ann Fox, CPA

 

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Dive into the Numbers-Who Does What?

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Bookkeepers, Accountants, & CPA’s: Who Does What?

 In my experience, I have found that frequently, many people do not understand the difference between a Bookkeeper, an Accountant, and a Certified Public Accountant.

A business owner may wonder, “ Do I need a bookkeeper or an accountant?”

The answer might be both.

The following general descriptions may provide some insight as to function and how each group may work together to provide value to those they serve.

Bookkeepers: May have Certifications

  • Uses accounting software to record day-to-day financial transactions
  • Generates financial reports
  • Sends invoices to customers
  • Enters invoices received from suppliers into the accounting system
  • Reconciles Bank Statements
  • Prepares Payroll
  • Specific responsibilities will vary by type and size of business
  • Work may be overseen by an accountant and/or the small business owner

Accountants: Bachelors Degree, with an emphasis in Accounting 

  • Assist Business Owners with their accounting systems, financial statements, income tax returns, tax planning, and investment decisions
  • Prepares detailed budgets
  • Works with a corporation’s management in analyzing costs of operations, products, and special projects such as forecasted to actual results
  • Works with management in setting prices of products manufactured or services offered
  • May prepare Cash Flow projections and analysis
  • Works with banks to ensure the company will have funds when required
  • Leads Tax Planning and determines income tax and other taxes payable to governmental entities
  • Assess financial risks associated with projects
  • Accountants and auditors perform overviews of the financial operations of a business in order to help it run efficiently.
  • May Supervise teams of Bookkeepers in a large office or work in conjunction with bookkeepers to provide a different level of service to owners
  • Help a business owner interpret the financial statements and offer suggestions to improve profitability, cash flow, and efficiency

 

Certified Public Accountants (CPA’s)- Licensed by the State and agrees to abide by a Code of Ethics

  • Have met the “Three E’s” – Education, Examination, and Experience – that are required for initial licensure as a CPA and they continue to meet the annual continuing education requirements to renew their license each year
  • The current exam includes 4 parts and includes a testing period of up to 14 hours
  • A minimum of 40 continuing education hours are required each year
  • CPA’s frequently become Trusted Business &/or Personal Financial Advisors
  • We may perform any of the services shown under Accountants, or work in Public Accounting which includes a wide range of accounting, auditing, tax, and consulting tasks for small business, corporations, non-profit organizations, government, and for individuals (Personal Financial Planning)
  • A CPA can do two things than an accountant without a CPA license cannot:
  1. Provide Attestation Services: Compilations, Reviews & Audits of an entity’s financial statements
  2. Represent clients in front of the Internal Revenue Service
  • Certified Public Accountants, Enrolled Agents, and Attorneys have Unlimited Representation Rights before the IRS. Tax professionals with these credentials may represent their clients on any matters including audits, payment/collection issues, and appeals

 

Accounting and Tax is like a foreign language for most people.

It is an acquired skill.

Experience can be wide and deep.

Yet, most of us “Number Crunchers” have one thing in common, we enjoy helping and we use our knowledge and experience to empower others.

We like to use our gifts to help you.

 

“The most important thing in communication is hearing what isn’t said” – Dr. Peter F. Drucker

Similarly, an accountant/CPA may find meaning for you by “reading between the lines” and offer suggestions to improve the Bottom Line on your financial statements.

 

Thanks for reading,

Deb

 

Deborah Ann Fox, CPA helps Small Business Owners & Individuals build and protect their financial wealth. She can help by being your compass while you captain your ship.

Debbie offers free 30 minute no obligation consultations and is available for appointments – including remote. More information is available at http://www.debfoxfinancial.com. Questions or comments can be sent to debfoxfinancial@gmail.com