A small business is an enterprise that is usually small in scale in terms of number of employees and/or sales revenues. A large majority of the businesses in the United State are small business. These businesses are usually registered as sole proprietor, meaning one individual owns it, or partnership, meaning 2 or more people owns the business.
One of the problems facing a small business is in terms of accounting. With the limitation in funds, some accounting is done by the business owner. The entrepreneur is tasked to run the business and at the same time handles the day-to-day accounting requirements of the company. Because of this, the company is often penalized by the government for late payment of taxes, late submission of tax documents and at times, non-submission of tax forms. Also, the business can also be penalized for erroneous computations of tax dues. The business owner has his/her hands full with running the business that handling the accounting requirements can be turned over to another person.
A business owner can hire an in-house accountant or he/she can outsource the small business accounting work to a CPA firm like Desert Rose Tax & Accounting. An outsourced accountant can sometimes be more beneficial than hiring an employee because it is less expensive to outsource than to hire. Also, the outsourced accountant doesn’t need a designated space while an in-house needs his/her own space in the office.
In choosing an accountant to handle small business accounting for the company, some tips can be useful. Before opening a business, the business owner must have a ready accountant. Since a CPA requires a license before he/she can practice the profession, one has to make sure that he/she has a license. The accountant must have experience in the kind of industry the business is in.
Also in a small business accounting setup, before hiring an outside CPA make sure that one knows how much the accountant charges. Fees charged by CPA firms can vary widely. It is good practice to compare the accountant fees with industry standards. The accountant must be able to fill the needs of the company. Before hiring an accountant, one has to interview at least 3 or more prospective accountants so one can compare which among the three will best serve the company’s purpose.
In handling the accounting needs of the company, the business owner must ask the prospective accountant about other possible services he/she can offer to the company like sales tax and payroll tax reporting services. Some Certified Public Accountants offer business advice to help the enterprise grow.
Also, the accountant best fitted to handle the small business accounting is the CPA whose accounting firm is also small. Accountants who own small firms understand how small businesses are run. They also have the time and resources to share with the business owner. It’s one thing to have a fancy degree in business and another to have practical experience running a small business. In the event that the business owner sells the business, the accountant must be good enough to discuss with the owner how to go about with the sale so that tax liabilities are minimized.
Prior to signing up an accountant for the small business accounting, the business owner must ask the accountant for client references so that the owner can investigate. One must also make sure that the accountant establishes a business relationship with the owner, meaning the accountant has time to visit the company every now and then rather than just seeing him/her only when it’s tax filing season.
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