The Number One Reason You Should Hire a CPA for Your Small Business

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You are busy growing your business.  Your time is spent managing employees, delivering contracts, advertising, managing your cash, talking to the bank, putting out fires, planning for the future, juggling invoices and receipts, and making sure that clients/customers get the value that they deserve when they choose you as a provider.  It probably feels like there are not enough hours in the day to do it all to the level that you want in order to deliver to the people who support your business.
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To run a successful business, you need to know what each of those “hats” feel like, but not put all of them on everyday.  Why is it important to know the basics?  Because you will, at some point, need to pass that hat to someone else, whether it is within your business or through your circle of trusted advisers.  It is your responsibility to the business to wear the hat that supports the company the most, the hat that you wear better than anyone else and delegating the other jobs to people that you trust, via having a professional service provider or hiring someone as an employee/contract labor.

We constantly have new clients that come in the door talking about how they are spending three-four hours a DAY on their accounting software.  That is 15-20 hours a WEEK of late nights at Starbucks pouring over Quickbooks and trying to figure out why that check won’t clear, mashing buttons out of frustration, looking at their accounts receivable and not being able to remember if that payment was made or not.  CPA’s solve this problem and that brings us to the number one reason you should hire a CPA.

To Make More Money

I’m sure you’re asking, “How does paying for something that I could do myself make me more money?”  The proven answer is that when a business is growing, an owner’s time is better spent in networking, building contacts, and leveraging their time correctly in order to gain the most efficient gains in their company’s bottom line.  The only thing you can’t replace in your business is your time.  Tons of business owners devalue what their own time is worth in the early stages of a company, and guess what, tons of small business fail.

Remember: “Nothing will help you succeed more than your own hard-work and determination.” <{Click Here to Tweet This Quote} Little Rock CPA

That is why you should be using the most important asset in your business to grow, not worry about accounting.

By hiring a CPA, you will not have to worry about preparing payroll tax reports, fulfilling IRS requirements for bookkeeping, or learning how to file your own income taxes.

You may be asking, “Why a CPA, why not just a bookkeeper or a part-time admin?” and the answer to that is that not all advisers are created equal.  While there are some bookkeepers out there that do know what they are doing, it is harder to find them than you think.  You could end up spending thousands of dollars at the end of the year having a CPA fix the errors that a bad bookkeeper created.

Now that being said, not all CPA’s are created equal either, it is important to find one that you are comfortable with, that is highly recommended, and is familiar with your industry.

Some of the other benefits include:

  • Having a trusted adviser to keep you up to date with new laws/IRS code updates.
  • Ensuring that you aren’t paying more in taxes than you should have to.
  • Letting a trained professional that takes hours and hours of education every year to be a second “set of eyes” on your company’s record.
  • You do need to know the basics of accounting, it’s incredibly important for all business owners, but you will learn faster by having a good CPA that helps teach you those basics rather than floundering on your own in the wide sea of information available today.

Connect with me on Linkedin my email is jonathan@scruggsridge.com if it requests it.

Yes, an Entrepreneur DID Build That.

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For those of you who missed it:

Now what do you think of this speech?

My Little Rock accounting clients work hard for their business and they’ve made huge sacrifices of; time, money, sanity, and more to build it  The notion of it taking a village is one thing but the way the President is talking in this speech is just disrespectful to a normal small business owner.

There are so many risks involved in going out on your own, yes Mr. President, we used the roads to get to work.  Yes Mr. President we “may” have used the Post Office at some point.  But you know what?  Those same business owners pay taxes, business license fees, payroll taxes for their employees, and help their local community grow.  If you want to know more about starting your own Arkansas business check out my other website ARStartup.com.

This speech does nothing, do you really think the business owners aren’t cognizant of the fact that they use public funded resources at some point in their life?  That they use public water and other resources?  Does the President realize that the business owners do in fact pay for those rights?

Now if he would have came out and said, “even if you think you’ve never taken a dime from the government, in a way, you have” and then listed examples, then now we are having a discussion.  I’m assuming this speech was meant to try and gain empathy from business owners for those that use government funding as a leech, but wow, does it miss the mark.

Yes, an ARntrepreneur DID build that! (<- Click Here to Tweet this Quote)

Feel free to leave a comment below expressing what you believe the President meant.

Obama’s Tax Plan, Little Rock, and Everything Else.

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The tax world has been waiting on bated breath, what’s going to happen in 2012?  The Bush tax cut’s are set to expire at the end of this year and President Obama hasn’t indicated what policies he would let expire or renew.  Here is a brief break-down of what the Bush tax cuts entailed:

  • Reduce Capital Gains Rate to 15%
  • Income Tax Rates Were Reduced Across the Board.

What President Obama is suggesting:

  • Raising Income Tax Rates for Families Making over $250,000 Year.
  • Keeping the 2.o% Cut on the Employee Social Security Contributions Withheld from W-2 Wages.

My opinion is that President Obama intentionally set the increase to be at the $250,000 level in order to give himself some bargaining room as the year closes.  I believe that by the time the cuts are extended, he will extend the cuts to everyone below the $1M range.Little Rock CPA

According to the Tax Policy Center, if the tax cuts expire for those earning over $250,000/year, only about 3% of small businesses in the US see any change in their taxes at the end of the year.  So if you don’t post a quarter of a million bucks a year on your tax return at the end of the year, you can stop reading, nothing happens to you on a personal level.

If you do make more than $250,000 a year, as of right now you are facing a possible increased tax burden, but there are ways to legally reduce your tax liability.  The easiest way to do so is if you own your own business.  You can optimize your business entity, take self employed health insurance deductions, and setup great retirement plans that can defer taxes.  If you haven’t done all of those steps, and need some help, feel free to contact me with any questions you might have.  My email is jonathan@scruggsridge.com

Now how does this possible tax break affect Little Rock?  Well if the national average of people affected by this tax policy expiration is 3%, Little Rock taxes will likely be slightly less affected than the rest of the country, due to our economy being more weighted towards the middle class.

There are probably plenty of people here in Little Rock thinking, what about my boss?  They make more than that!  If they have to pay $35,000 more in taxes then that is the cost of my salary for the year!  Well, fortunately for you that is not how business works.  If you are producing at least your salary in value for your business here in Little Rock, you have nothing to worry about.  If you aren’t producing that much value to your company, then you likely didn’t have that much time left in your position anyways.

Think about it, if you are earning $1,000,000/year owning a part of a business, and you are all of a sudden having to pay an additional $35,000 a year in taxes, and you rationale, “Well, I need to let Susie go because I have $35,000 more in taxes this year.” Then what happens to that position?  Everyone else has to cover for those responsibilities, if you are in a small business setting, that could be next to impossible.  If you are in a mid-to-large sized company, there would be a large waterfall effect throughout the ranks of the company, and then not even the owners would make any money.  It’s never a problem to make too much money, don’t let politicians trick you into believing it.

You heard it here first, “Taxes Don’t Mean Less Jobs” (<- Click Here to Tweet this Quote)

Now, the estate tax exclusion expiring at the end of the year is a completely different post, I’ll get to that soon so stay tuned.