When to Hire a CPA for Your Small Business

Are you putting in long hours at work, only to come home to continue working late into the night on the books? The truth is many small businesses operate like this. But it's not sustainable. Burn out will eventually ensue and what you were once passionate about will become a big ball of frustration.

So, how do you discover your true gifts and manage your laundry list of to-do's so that you can focus on the parts of your business you're good at and enjoy?

Delegate and Elevate

A great exercise from the book, Traction, written by EOS founder Gino Wickman, helps you identify and clarify the activities you should delegate to others in order to free up your time capacity to grow your business without losing yourself. This is called the “delegate and elevate” exercise. 

Here's how it works:

First, make a list of every single business-related task or activity that you do during the course of a day. Take your time with this — you'll want to be patient and thorough. This step could take one or two weeks to complete.

Then, using the "Delegate and Elevate" diagram below, place each task or activity in one of each of the four quadrants. Again, do this with intention and be honest with yourself.

• “Love/Great” activities are those that you’ve mastered and that you love doing — they give you energy and a sense of fulfillment.
• “Like/Good” activities are those that you can do with minimal effort and that give you enjoyment and satisfaction.
• “Don’t Like/Good” activities are those that you are good at doing — you have learned to do them well through repetition and necessity, but they don’t give you real satisfaction or a sense of fulfillment.
• “Don’t Like/Not Good” activities are most likely outside your area of expertise that leave you feeling inadequate and frustrated.

If handling the books ends up in either of the bottom quadrants, it might be a good time to hire a CPA to handle them.

Signs it's Time to Hire a CPA

There's no magic formula for determining the right time to make the switch, but there are some clear signs that it's a great idea.

• You're Losing Track of Time: Are you spending evenings and weekends catching up on bookkeeping instead of focusing on growing your business or spending time with family? When bookkeeping cuts into your productive business hours, it's a sign you need help. 
• Your Business is Complex: Does your business have multiple employees, complex financial structures, or sell products in different states? 
• Your Bookkeeper Isn't an Accountant: If your spouse or an untrained bookkeeper is handling the books, they might miss accounting nuances that could lead to missed deductions or misled decisions. 
• You Fear the IRS Audit Knock: Proper bookkeeping dramatically reduces the risk of errors and prepares you for potential audits. 
• Payroll Woes: Payroll mistakes can be costly and stressful. Hiring a professional ensures it's done correctly. 

• You Don't Understand Your Financials: Do you have a basic understanding of your profit and loss (P&L) statement but struggle with the balance sheet or tax implications of certain transactions? A CPA can help create action items from the financial statements, not just complete the tasks. 

 The Benefits of Hiring a CPA

• Peace of Mind: Knowing your finances are in order allows you to focus on running your business instead of worrying about bookkeeping mistakes or potential tax issues. 

• Strategic Tax Planning: A CPA can help you minimize your tax liability and maximize your profits by identifying deductions and credits you might not be aware of. 

• Financial Clarity: Get insights from your financials to make informed business decisions. A CPA can help you analyze your financial statements to identify trends, track profitability, and make data-driven choices for your business. 

• Compliance with Regulations: Staying on top of ever-changing tax laws and regulations can be a challenge. A CPA can ensure your business is compliant and avoid costly penalties. 

• Improved Cash Flow Management: A CPA can help you develop strategies to manage your cash flow more effectively. This can help you avoid cash shortages and ensure you have the funds you need to grow your business. 

• Access to a Financial Expert: A CPA is a valuable resource who can answer your financial questions and provide guidance throughout the year. They can advise you on everything from tax planning and budgeting to financial forecasting and business structure. 

Beyond Bookkeeping

While bookkeeping is a core service offered by CPAs, their expertise extends far beyond keeping your books in order. A qualified CPA can also assist you with: 

• Business Planning and Strategy: Developing a solid business plan is essential for securing funding and achieving your business goals. A CPA can help you create a financial forecast, analyze your market, and develop strategies to achieve your financial objectives. 

• Mergers and Acquisitions: If you're considering buying or selling a business, a CPA can help you evaluate a potential acquisition or offer. 

• Loan Applications: The loan application process can be complex. A CPA can help you gather the necessary financial documents and ensure your application is accurate and complete. 

It's About Efficiency, Not Just Cost 

While hiring a CPA is an investment, it can be more efficient than spending countless hours struggling with bookkeeping yourself. A CPA can likely do your bookkeeping tasks in a fraction of the time it takes you. That time saved can be used to generate more revenue for your business, focus on strategic planning, or spend more time with family and friends. 

So, How Much Does It Cost? 

A ballpark figure for accounting services is 1-2% of your business revenue. 

The Next Step 

If you're unsure whether to hire a CPA, reach out to a CPA for a consultation. Discuss your business needs to see if they match with their services and prices. A reputable accounting firm will be able to have much of the information available on their website including their monthly fees.

If you want to find out whether Kaizen CPAs + Advisors is a good fit for your business, click the ‘Let’s Chat’ button and tell us your story.