Nearly70% of small businessesdon’t have an accountant, and many owners feel underprepared to handle their accounting needs. This gap leaves a lot of room for costly mistakes, especially when tax season rolls around.  A CPA can help you with compliance and provide valuable insights into financial planning and tax strategies. So, hiring a CPA might be the next logical step if you're struggling to keep up with taxes and financial statements or simply want to ensure you’re not leaving money on the table.

Key Takeaways

Hiring a CPA can save you timeby handling taxes, payroll, and financial reporting, allowing you to focus on growing your business.

A CPAensures compliance with tax laws and regulations, reducing the risk of penalties or audits.

CPAs offerexpert financial advice and strategic planningto help optimize your cash flow, profitability, and long-term growth.

A CPA canmaximize tax deductions and credits, potentially saving you significant taxes.

What is a CPA?

A CPA is a highly qualified accounting professional who has met stringent educational, testing, and licensing requirements set by their state. They have passed the rigorous Uniform CPA Exam, which tests their knowledge in auditing and attestation, business concepts, financial accounting and reporting, and regulation. CPAs are also required to complete continuing education to maintain their license and stay current with changes in tax laws and accounting standards.  This ensures they possess the most up-to-date knowledge to provide their clients with accurate and reliable financial advice.

Examples of CPA services for small businesses

CPAs offer a wide range of services that can benefit your small business. These include:Tax preparationand planning:CPAs ensure your business complies with tax laws, helping you file accurate tax returns and avoid costly mistakes or penalties. They also offer tax planning services to minimize tax liability throughout the year.Financial statement preparation and analysis: CPAs prepare financial statements, such as profit and loss statements, balance sheets, and cash flow reports. These documents provide insights into your business's financial health. They can also analyze your financial data to identify trends, risks, and opportunities for improvement.Bookkeepingand accounting services: CPAs can handle your day-to-day bookkeeping tasks, such as recording transactions, reconciling accounts, and generating financial reports. They can also help you set up and maintain an efficient accounting system.Business advisory services: CPAs can provide valuable insights and recommendations on various aspects of your business, such as budgeting, cash flow management, pricing strategies, and growth planning. They can serve as trusted advisors, helping you make informed decisions based on your financial data.

Benefits of Hiring a CPA for Your Small Business

Here are the key benefits of hiring a CPA for your small business:

Save Time and Focus on Your Business

Handling accounting yourself takes time away from other critical business areas like operations, marketing, or customer service. A CPA can manage tax preparation, payroll, and financial reporting, allowing you to concentrate on growing your business.  For example, a CPA can streamline your payroll, ensuring that employees are paid on time while you focus on securing new clients or expanding your product line.

Ensure Compliance with Tax Laws and Regulations

Tax laws constantly change, and staying updated on regulations can be overwhelming.  A CPA helps ensure your business complies with local, state, and federal tax laws.  For instance, they can help youproperly classify workers as employees or contractors—an area where mistakes can lead to costly fines​. Additionally, a CPA can help you file taxes correctly, minimizing errors that could trigger audits.

Get Expert Financial Advice and Planning

CPAs possess a deep understanding of financial management and can offer valuable insights to help your small business thrive. They cananalyze your financial statements, identify areas for improvement,and develop strategies to optimize your cash flow, profitability, and growth.  CPAs can also assist with budgeting, forecasting, and decision-making, providing objective advice based on your unique business needs and goals.

Improve Financial Organization and Recordkeeping

Good recordkeeping is essential for tracking business performance and preparing for tax season.  A CPA can help you establish anefficient bookkeeping systemand ensure your financial transactions are properly recorded and categorized.  They can alsoassist with reconciling bank statements, tracking expenses, and generating timely financial reports. With a CPA's expertise, you can always have a clear picture of your business's financial health.

Maximize Tax Deductions and Credits

CPAs are experts inidentifying deductions and creditsthat small business owners often overlook. They can ensureyou claim all eligible expenses—from office supplies to home office deductions—resulting in substantial tax savings. For instance, a CPA might recommend taking advantage of theSection 179deduction to deduct the full purchase price of qualifying equipment in the year it's placed in service.

Reduce the Risk of Audit or Financial Mistakes

Filing errors, improper deductions, or incomplete recordsincrease the risk of being audited. A CPA helps reduce this risk by ensuring all tax filings are accurate and compliant. Should an audit occur, your CPA can represent you and provide the necessary documentation to support your case.  By maintaining accurate financial records and adhering to tax regulations, you can avoid common financial mistakes that could result in penalties.

When Should You Hire a CPA for Your Small Business?

As a small business owner, you might wear many hats—handling everything from marketing to customer service to bookkeeping. While you can manage basic financial tasks early on, there comes a point when hiring a CPA is essential to help streamline operations, save money, and ensure compliance.  The question is,when does that time arrive?Let’s break down the specific scenarios when hiring a CPA makes sense.

1. When You're Launching Your Business

At the start,getting the financial structure of your business right is crucial. A CPA can help you choose the best business entity (LLC, sole proprietorship, corporation)based on your goals and tax implications. They can also assist in setting up accounting systems, ensuring you record income and expenses properly from day one. Selecting the wrong business structure could lead to paying more taxes than necessary, which a CPA can help you avoid​.

2. When Tax Season Feels Overwhelming

Handling taxes is more than just filing once a year. It involvestax planning, knowing which deductions apply to your business, and ensuring you comply with local and federal laws.  If you’re uncertain about tax deadlines, what deductions to take, or fear an audit, it’s a good time to bring in a CPA.  They can handle everything from quarterly tax payments to ensuring you claim deductions for business travel, home office expenses, and equipment depreciation.

3. When You're Scaling the Business

As your business grows, so does the complexity of your finances. Scaling often means hiring employees, managing larger contracts, and handling more significant cash flow. A CPA can provide financial projections, manage payroll taxes, and help you navigate regulatory requirements.  For example, if you plan to expand into a new state or market, a CPA can ensure you comply with regional tax laws and labor regulations​.

4. When You're Applying for Business Loans

Securing abusiness loan requires detailed financial documentation, including profit and loss statements, balance sheets, and cash flow projections. Lenders often look at the accuracy of your financials to determine loan eligibility.  A CPA can help prepare these documents and present them in a way that maximizes your chances of securing funding.  This can also help you get better loan terms or increase your chances of approval.

5. When You're Planning for Growth or Expansion

If you’re considering expanding your business—adding a new location, launching new products, or acquiring another company—a CPA’s expertise becomes invaluable.  They can analyze the financial implications, help you understand cash flow impacts, and assist in forecasting.  When opening a second location, a CPA can help determine if your current profits can support the expansion and how to structure the investment​.

6. When You're Facing an Audit or Financial Review

Getting audited by the IRS or any regulatory body can be daunting. If you find yourself in this situation, hiring a CPA is critical.  They can help gather all necessary documents, represent you in front of auditors, and ensure you comply with regulations.A CPA can also prevent auditsby keeping your financial records accurate and timely, helping avoid red flags that might trigger an audit​.

7. When You Need Financial Strategy and Forecasting

Planning for the future is a vital part of business success. A CPA can provide valuable financial strategy andforecasting when exploring new revenue streams, preparing for market downturns, or planning retirement.  They can use your financial data to build models that show what future profits and losses might look like, helping you make informed decisions about growth and sustainability.

How to Choose the Right CPA for Your Small Business

Choosing the right CPA for your small business requires careful consideration.  Here are some key factors to consider when selecting a CPA to ensure a successful working relationship.

Look for Experience with Small Businesses in Your Industry

When evaluating potential CPAs,seek out those with experience working with small businesses, particularly in your industry. A CPA who understands your sector's unique challenges and opportunities can provide more targeted and relevant advice. They can also offer insights into industry-specific tax deductions, compliance requirements, and best practices.

Check Credentials, Licensing, and References

Verify that the CPA you're considering is licensedand in good standing with their state board of accountancy.  You can check this information online through the state board's website.  For example, theCalifornia Board of Accountancyallows you to search for California-licensed CPAs and accounting firms to find their license status and any disciplinary actions. Additionally,ask for references from other small business ownerswho have worked with the CPA. Contact these references to gauge their satisfaction with the CPA's services, responsiveness, and expertise. To make things easier,you can check a platform likeSam's List. There, you can see who has endorsed an accountant and why, contact an accountant directly, or even book an introductory call with them for free.

Consider Availability and Responsiveness

Your small business needs aCPA who is accessible and responsive to your needs. Inquire about the CPA's availability and preferred communication methods. 

Will you have a dedicated point of contact, or will you be working with a team?

How quickly can you expect a response to your questions or concerns? 

A CPA who is prompt and reliable in their communication can help you address financial issues promptly.

Evaluate Fees and Pricing Structure

CPA fees vary widelydepending on factors such as location, experience, and the complexity of your business.  Some CPAs charge by the hour, while others offer fixed-fee packages or monthly retainers. Be sure to discuss fees and pricing upfront to avoid any surprises. Consider the value you're receiving for the price, and don't hesitate to negotiate or shop around to find the best fit for your budget.

Assess Communication Style and Personal Fit

Beyond technical expertise, it's important tofind a CPA whose communication style and personality align with your own.  You'll work closely with this professional, so you must feel comfortable and confident in your interactions. Schedule an initial consultation to understand the CPA's demeanor and approach. 

Do they take the time to listen to your concerns and explain concepts clearly? 

Do they seem genuinely interested in your business's success?

What Are the Costs of Hiring a CPA for a Small Business?

Thecost of hiring a CPAfor your small business can vary significantly based on several factors, including the complexity of your financial needs, the CPA’s expertise, and your location.  Here’s a detailed breakdown of what you can expect:

1. Tax Preparation

Small businesses with straightforward financials can expect topay between $500 and $2,500 per yearfor basic tax preparation.  The more complex your tax situation (e.g., owning multiple entities or operating across different states), the higher the fees may go, especially if additional returns or detailed tax planning are required.

2. Bookkeeping Services

If youneed ongoing bookkeeping, the monthly costs range from $200 to $400. This service includes recording transactions, reconciling accounts, and preparing monthly financial statements.  Remember that if your books are disorganized, you may incur additional cleaning charges before tax season.

3. Comprehensive Financial Services

For moreinvolved services like financial analysis, budgeting, and strategic planning, costs can range from $1,000 to $5,000 or more per month.  These services are crucial to scale your business or need long-term financial guidance.

4. Hourly Rates

Many CPAs charge hourly for services that don't fall into fixed categories. According to Glassdoor,rates range from $23 to $64 per hour, depending on the CPA’s experience and the complexity of the work. Experienced CPAs or partners at larger firms usually command higher fees, while junior staff or smaller firms may charge less.

5. Factors Affecting Costs

Several factors can impact the cost:

Complexity of services: More complicated financials (such as multiple entities or significant investments) increase the cost.

Geographic location: CPAs in larger cities tend to charge more due to higher living costs.

Industry expertise: CPAs with specialized knowledge in your industry may charge a premium, but their expertise could save you money in the long run.

Alternatives to Hiring a CPA for Your Small Business

If hiring a CPA is outside your budget or your small business has simpler financial needs, there are several alternatives you can explore:

1. DIY Accounting with Software

Accounting software likeQuickBooks,Xero, orWavecan handle basic bookkeeping, invoicing, and tax preparation. These platforms automate many processes, saving time and reducing human error.  They are ideal if you’re confident in managing your finances but need organizational help.  QuickBooks, for instance,is an industry-standardand offers plans starting around $25/month, making it a cost-effective solution for many small businesses.Pros

Affordable and easy to use.

Offers integration with other business tools.

It helps you stay organized without needing extensive accounting knowledge.

Cons

You are responsible for accuracy and may miss key deductions or regulatory changes​.

2. Freelance or Part-Time Accountant

A freelance accountant can provide many of the same services as a CPA but at a lower cost. Freelancers often have flexible pricingand can assist with tasks like bookkeeping, payroll, and tax preparation. This option is ideal for businesses that need occasional support without the commitment of hiring a full-time accountant.Pros

More affordable than hiring a CPA full-time.

Personalized service based on your specific needs.

Cons

Limited availability, especially during peak tax season.

May lack the breadth of expertise that a CPA firm can offer​.

3. In-House Accountant

Hiring an in-house accountant can be beneficial if you need constant support for your financial operations. This option is more costly than outsourcing, as it includes salary, benefits, and training.  However, it offers ongoing financial management and better integration into your daily business activities.Pros

Consistent availability and deep familiarity with your business.

Direct control over financial tasks.

Cons

Higher costs due to salary and benefits.

Limited range of expertise compared to a CPA firm​.

4. All-in-One Online Accounting Services

Platforms likeCollectiveorBenchoffer online bookkeeping and accounting services.  These services bundle tasks like bookkeeping, payroll, and tax filing into one subscription, providing a more integrated solution at a lower cost than a traditional CPA firm.Pros

Comprehensive, tech-driven solutions.

Lower cost compared to hiring a full-service CPA firm.

Cons

Less personalized than working directly with a CPA.

May lack advanced consulting and strategic services​.

These alternatives provide flexibility for small business owners who need financial help without the higher costs of hiring a CPA.  Always evaluate the complexity of your financial needs before deciding which solution fits best.

How to Choose the Right CPA for My Small Business?

Choosing the right CPA for your small business is an important decision that can impact your finances, tax efficiency, and overall business success.  Here are the steps you should follow to make the best choice:

1. Identify Your Needs

Before searching for a CPA, clarify what services your business needs. Are you seeking tax preparation, bookkeeping, financial strategy, or audit support? Some CPAs specialize in specific areas, so understanding your needs helps you narrow down your options.

2. Check Qualifications and Experience

Always verify that the CPA is licensedand in good standing with the relevant state board. Look for qualifications such as a CPA license, additional certifications, and memberships in professional organizations like the AICPA. It is also important to ensure that the CPA has experience working with businesses in your industry.  A CPA knowledgeable about your sector’s unique financial challenges and tax regulations will provide more tailored advice​.

3. Consider Availability and Communication

Determine how often you need to interact with your CPA. Some business owners require monthly meetings, while others may only need quarterly check-ins. Make sure the CPA’s communication style and availability match your expectations.  You’ll wantsomeone who can respond promptlyto urgent issues and explain complex financial matters in a clear and understandable way​.

4. Ask About the Pricing Structure

CPAs can charge based on hourly rates, flat fees for specific tasks, or a monthly retainer. Understand how you’ll be billedand what services are included in the quoted price.  Ensure the cost structure aligns with your budget, and inquire about additional fees for tasks like audits or year-round tax planning​.

5. Request References and Reviews

Ask potential CPAs for references from other small businesses they have worked with. Contact these references to understand the CPA’s responsiveness, expertise, and overall service quality.  Additionally,check for online reviews or testimonialsto get a broader sense of the CPA’s reputation.

6. Ensure They Provide Value-Added Services

Look for CPAs who go beyond basic compliance work. Value-added services like financial planning, cash flow management, and assistance with securing loans can provide significant long-term benefits. Choosing a CPA who offers strategic advice will help you grow your business efficiently​.

Best Option: Check on Sam’s List

One of the most efficient ways to find a qualified CPA for your small business is to useSam’s List.  On Sam’s List, you can:

See endorsements from other business ownersto understand why they recommend a specific CPA.

Contact accountants directlyto inquire about their services and rates.

Book a free introductory callto discuss your needs and get personalized recommendations tailored to your business.

Get matched with an accountantbased on your specific needs, saving you time in the search process.

Sam’s List provides a comprehensive, transparent platform where you can research accountants, read reviews, and make an informed decision—ensuring you find a CPA who is a great fit for your small business.Visit Sam’s List today.