CPA stands for Certified Public Accountant – a professional that handles a wide range of accounting-related tasks for businesses and organizations of varying scales. Some of the services that they offer include:
- Tax Services – Such as tax – preparation & filing, planning, compliance, and representation
- Auditing & Assurance Services – Such as internal, financial, forensic, and compliance audits
- Accounting & Bookkeeping – Such as financial reporting & record keeping, cost accounting, and payroll services
- Management Accounting – Such as performance measurement, cost management, budgeting, and forecasting
Furthermore, territorial licensing is a large part of what qualifies them as true professionals in this line of work. For example, a Los Angeles CPA would be one licensed by the pertinent state board in California. So, geographical relevance should be taken into account when considering them.
Having established this, the article discusses the benefits of engaging the services of CPAs. So, read on to find out the sense behind hiring them, particularly for tax accounting purposes.
Reasons You Should Hire a CPA for Tax Accounting
Businesses that do not hire CPAs are not violating any law. This is as long as they are capable of taking good care of their accounting and bookkeeping roles and responsibilities.
However, this is strongly discouraged because of the many advantages of working with these professionals. Some of what they have to offer are discussed below:
1. Knowledge & Expertise
There is a lot to be understood in the spirit of handling tax accounting as well as how it should be handled. Speaking of knowledge of these things, you should not expect anything less from CPAs. This is considering the sort of rigorous and extensive training and examinations that they have to take before their certification.
Furthermore, tax accounting laws are sometimes revisited. This can be instigated by the IRS or even policy-makers at state or even federal level. The point is that these professionals are usually up to speed with latest developments in this regard.
2. Accuracy & Compliance
Errors during tax filing can have very negative consequences for businesses and organizations at large. Some of the adverse consequences can include:
- Overpayment
- Penalties for Late Filing
- Penalties for Underreporting
- Evasion Penalties
- Legal Action
- Loss of a Business’s Credibility
The list goes on, but they are all harsh realities for concerned businesses. You can check out this piece for more information on this.
This goes to say that businesses have to be very meticulous, yet time-conscious about these things. CPAs can guarantee this because of their training and experience.
3. Tax Planning & Strategy
CPAs are not just about bookkeeping and promptly & accurately filing taxes. They offer more and tax planning & strategy is one of the ways they do this.
Overall, their services come in handy in the area of minimizing tax liabilities. This could be through the maximization of tax credit and deductions, depending on the peculiarities involved. They are also known for developing feasible but rewarding long-term strategies.
4. Representation & Advocacy
An IRS-instituted audit is less likely to happen when you have a CPA in your team. However, their services are still very relevant if you are subjected to this kind of audit.
The reason is that they offer professional representation services in such situations. This is all in the bid to protect your business or organization’s interest.
By the way, businesses or organizations facing penalties for violating tax laws can still make the most of these professionals. Their ability to negotiate for reduced penalties is the reason for this.
5. Stress & Time Saving
The process of self-handling the tasks that these professionals are trained to handle is usually very stressful and time-consuming. This is besides the increased possibility of making costly mistakes and facing the penalties that apply. In other words, trusting CPAs with these tax-related duties means that you can channel your economic hours into other important things.
6. Financial Insights
Many businesses end up making uninformed business decisions for any of several reasons. However, some reasons are more common than others.
Ignorance of a business’s true financial state is one of the common reasons. Fortunately, CPAs can help greatly in this regard because of their pertinent knowledge of financial analysis. As a result, making informed decisions, especially in the areas of budgeting and forecasting, would be easier.
7. Cost-Efficiency
Cost factor is a common reason why many businesses fail to hire CPAs. Well, this is quite an irony considering how hiring a CPA is cost-saving.
For one, this is about their tax planning benefit; as they help in minimizing tax liabilities as discussed earlier. Furthermore, it is about the increased guarantee of avoiding penalties associated with violating tax laws. For more on this, you can check: https://www.irs.gov/.
Wrap Up
The services of CPAs may not be mandatory for businesses. However, these professional services are certainly necessary, especially for business and organizations that have grown to a certain stage.
This is in light of what they offer, including the benefits shared here. So, businesses and organizations at large should make the most of them in their best interest.
