If you’re starting your own business, a CPA can help you make it as successful as possible. They can prepare realistic revenue projections, manage cash flow and highlight any issues you need to fix.
They can also help you with big decisions, like if and how to hire employees or how to apply for loans. You’ll want an unbiased opinion and guidance on these critical business decisions, which can significantly impact your company’s future.
Tax Preparation
Tax preparation is preparing and filing a tax return with the IRS. It can be done on your own or with the help of a professional preparer (CPA).
A CPA is a licensed accountant who has completed a study in accounting, met experience and character requirements established by the state or territory board of accountancy, and passed a Uniform CPA Examination. They must comply with ethical requirements and complete specified levels of continuing education to maintain their license.
In addition to preparing tax returns, CPAs prepare financial statements for clients and perform other accounting services as needed. These services include auditing and project accounting, among others.
One of the essential things a preparer can do for their clients is to be up-to-date on changes in the tax code and to stay informed about new rules, regulations, and other developments. This helps to keep clients happy and ensures that the tax returns they file are accurate.
A tax preparer must have a Preparer Tax Identification Number (PTIN) and an Electronic Filing Identification Number (EFIN). The IRS must issue both.
Financial Statement Preparation
Financial statements are essential for a business because they give stakeholders a detailed picture of the company’s financial health and performance. These reports are often used internally to help companies make decisions, but they can also be distributed externally to lenders, creditors, or investors who use them to evaluate the company’s financial position.
Certified Public Accountants like Eidebailly.com offer several financial statement services to help their clients meet these needs. These include compilations, reviews, and audits.
The most basic financial statement is the balance sheet, which provides a snapshot of a company’s assets, liabilities, and owner’s equity. A profit and loss statement, or income statement, provides a more in-depth look at the organization’s revenue and expenses during a particular period.
Financial statement preparation involves preparing these reports based on general accounting principles and knowledge of your industry. These statements are prepared without any assurance that they are reliable or that the information is correct.
Business Planning
Business planning is determining short and long-term goals and developing strategies to achieve them. It includes everything from evaluating the competition and figuring out how to compete with them to assessing employee morale and preparing for growth.
While a business plan is often used to secure funding, it’s a valuable tool for any business owner. Even if you don’t seek financing, a business plan will help you develop a strategy and plan for growth.
Your strategic business plan should include an overview of your business concept, product description and differentiation, marketing and sales strategy, and a budget. It also should include a competitive analysis outlining how you’ll compete with existing companies in the industry.
This section should be updated regularly to reflect new developments and trends in the industry. For example, if you’re launching a new line of products, your plan should be changed accordingly to reflect that. It’s also important to consider potential new competitors, changes in the general economy, or the needs of your primary customer base.
Financial Analysis
Financial analysis is the process of evaluating a business’s finances and its future to determine what action it will need to take in order to stay afloat, make a profit, or avoid bankruptcy. It also helps investors decide whether to invest in a company.
A number of different financial analysis techniques can be applied to a company’s finances. For example, horizontal analysis entails comparing several years of data to see whether the company is growing or declining.
The vertical analysis compares each component of a financial statement to a benchmark that’s been selected by a company. This can include the cost of goods sold, gross profit, or net income.
Another type of analysis is liquidity analysis, which assesses a company’s ability to pay back debts or expenses. This is especially helpful for lenders who want to know whether a company can repay them before offering them a loan or credit.
Budgeting
Whether a start-up or an established business, Certified Public Accountants can help you reach your financial goals by analyzing and reporting on your company’s finances. Their services also include assisting you with setting up an accurate accounting system and tracking expenses.
Budgeting is an active process that changes every month, so having a sound system is essential to track your expenses. Using an accountant to help you set up and maintain this system can free your time to focus on other business areas.
In addition, a CPA can help you find tax-deductible items that can save your company money. These include cell phone plans, advertising fees, and office supplies.
To become a Certified Public Accountant, applicants must complete an approved program of study, acquire at least two years of professional accounting experience, and pass the rigorous CPA exam. They must then be licensed by the state or jurisdiction in which they live.
