CPAs can provide more value to your business than you’re probably taking advantage of. Most people associate Certified Public Accountants (CPAs) with tax preparation. However, CPAs can provide value to businesses in many ways. How can a CPA can help your business?
CPAs have extensive educational and experiential requirements that make them uniquely qualified to help guide business owners. Their services go far beyond filing tax returns and preparing financial statements. CPAs are respected and trusted professionals who can help:
- minimize risk,
- minimize expenses,
- maximize efficiency and
- maximize cash flow.
Entrepreneurs often hire CPAs to work alongside their management staff as trusted advisers.
Only CPAs can perform financial statement audits
Auditing financial statements is a service that only a CPA can offer. An audit is an independent evaluation of a business’ financial statements. After an audit has been conducted, the CPA issues a report expressing an opinion on the financial statements.
Certain situations require an audit. For example, publicly traded companies are required to have a yearly financial statement audit. Audits are a U.S. Securities and Exchange Commission (SEC) requirement. Furthermore, audited financial statements are provided to shareholders and made available to the public. Some business’ also have lenders or investors who require the business’ financial statements to be audited.
CPAs offer risk assessment and advisory consulting
Spotting potential risks and establishing policies and procedures to protect your business are two of the most important tasks a CPA may perform. CPAs are outsiders with experience in risk management. As a result, a CPA can bring an objective and informed perspective to spot potential risks.
Cyber threats, uninsured exposure, and any other areas of weakness need to be addressed by implementing internal controls. In a competitive business environment, a company without adequate internal controls risks losing money. Or worse, legal action. Or worse yet, going out of business altogether. CPAs who specialize in risk management can prevent losses from preventable causes.
Risk management is the 4th pillar in The 4 Pillars of Business Strategy. To read more about risk management and how it applies to the 4 Pillars, check out this Quora post.
CPAs provide management services
CPAs may offer consulting services to business owners to assist them in many areas. Small business owners view CPAs as trusted advisers who solve problems and establish necessary operational and financial systems for business growth and success.
Identifying strategies to make your business more competitive is the type of advice CPAs may offer. CPAs in public practice are exposed to a variety of business models. As a result, this experience gives CPAs an informed perspective about viable and proven strategies. Common consultative services CPAs offer include:
- cash flow management,
- KPI development,
- insurance advice,
- risk management services,
- software consulting,
- succession planning, and
- investment guidance.
Additionally, CPAs can help when it is time to prepare a loan application and submit financial statements.
CPAs serve as outsourced accountants or virtual CFOs
Small companies often find it less expensive to outsource controller or CFO duties to a CPA. This setup allows a small business to receive top-level help from a professional on an as-needed basis without paying the high salary that a full-time controller or CFO would command. It also helps to save on software costs. In this role, CPAs perform or oversee:
- basic bookkeeping
- account reconciliations
- financial statements
- ad hoc reporting
- cash flow management & forecasting
- make sales tax payments and complete other tax compliance duties
Outsourced accounting and virtual CFO arrangements can help you grow your business. In such an arrangement, you receive all of the benefits of a full finance department at a fraction of the cost. Are you wondering how to determine when you should outsource your accounting function? Check out this Quora post where I answer that question.
CPAs help with business intelligence
Businesses should use applications wherever possible to:
- Create automation and efficiency, and
- Gather data
The best process is to marry financial data with non-financial data to create leveraged data. The more data you can gather about your customers, processes, suppliers, employees, financials, etc., the more flexibility you have to measure and track the KPIs that matter to your business, and to provide context to those measurements.
The collection and processing of data and advanced analytics is rapidly becoming democratized. There’s really no excuse not to have good business intelligence. Data and analytics are creating a competitive advantage for many businesses. Is your business one of them? A good CPA can help your business put the processes and systems in place to leverage business intelligence.
CPAs value businesses
When it’s time to buy or sell a business, a CPA may be able to provide a valuation of that business. They offer guidance on the best time to buy or sell a business. Additionally, a CPA can help structure the deal to minimize the tax impact of the transaction.
Even if you’re not ready to sell your business, a CPA can help. A useful exercise is to measure and track the value of your business over time. For many small business owners, their business is their largest asset – even more so than their house! This means the business is likely part of the owner’s retirement plan. Therefore, it’s important to track the value of the business over time, and to take actions to increase that value.
Interested in tracking your business’ value over time? An outsourced accounting arrangement might be right for you.
So, what are the signs of a good CPA?
The following text originally appeared here on Quora.
There are tons of articles, >blog posts and Quora answers about this topic, but as a CPA who is in the business, I will provide my take. At a high level, I think there are 5 main areas which separate the good CPAs from the mediocre:
As a CPA, your job is to communicate a story to business owners, decision-makers and/or taxpayers about what’s going on in their world from a financial perspective. To do this effectively, a CPA needs to have a lot of tools in their toolbox. For example, spreadsheets, dashboards, etc. A good CPA must also possess an ability to explain difficult concepts so everybody can understand them.
Thinks about the things you’re not thinking about.
A good CPA will be able to help you think strategically about your business. In particular, a good CPA will be thinking about hard trends that will impact your business. A good CPA is constantly on the lookout for what’s coming down the pike.
A good CPA looks for solutions and provides guidance before you knew there was a problem.
Always learning and iterating.
Generally, a CPA must take 40 hours of Continuing Professional Education (CPE) each year to maintain their license. I once read that the best CPAs take about 80 hours a year, on average. I would take this one step further and say the best CPAs are doing a lot of CPE, but they are also learning outside of CPE courses by reading books, trade journals, listening to podcasts, watching webinars and the like. The best CPAs do this so they can stay ahead of the curve, and develop new products and service offerings to benefit their clients.
Easy to work with.
Where do they show up? Are they on social media? How long does it take them to return an email? Do they utilize an online portal for documents, or do they only deal in paper? Are they the type of person that you’d want to grab coffee or a beer with? Do you feel like you’re going to the dentist when you go to their office?
The bottom line
The special relationship a business owner has with a CPA can impact the business’ success in a positive way. CPAs are trusted professionals who offer in-depth expertise to business owners and managers. Armed with vast financial knowledge about your business and acting as advisers, these financial experts can evaluate your business and suggest solutions to your business’ problems. Business problems that could snowball if left unchecked. A CPA can help you measure what matters in your business and determine the best course to take.