Do I Need A CPA For My Small Business? (2024)

If you’re a small business owner, it’s essential that you follow proper accounting practices to ensure maximum returns for your investments.

Here are four ways small businesses can handle accounting:

Use Accounting Software

In the past, keeping track of books and records was often done manually with pen and paper. Today, a lot of businesses rely on accounting software to help them manage their finances. There are many types of accounting software available for you to choose from—it depends on your industry, budget and choice. We reviewed this in our best accounting software for small businesses article.

Pricing of popular accounting software typically ranges from $0 (free forever plan) to $30 per month.

Who it’s best for: Small businesses (including freelancers and startups) with limited budgets are ideal candidates for accounting software.

Pros	Cons
You can get started with accounting software easily Most programs have user-friendly features You don’t necessarily need extensive training or specialized knowledge of the program itself Using accounting software can help you organize your finances, save time and make more money	Initial training and implementation can be hectic In cases of power loss or down servers, cloud-based accounting tools cannot function

Hire an In-House Accountant

If you’re just starting out in business and don’t want to take on the full burden of bookkeeping yourself, hiring someone else for that purpose may be ideal for your business needs. Hiring an accountant will allow them access to all of their systems so they can handle everything from payroll processing to tax filings without you having to worry about key issues.

According to the U.S. Bureau of Labor Statistics (BLS), the median annual wage for accountants and auditors was $77,250 as of 2021, which is more than $30,000 higher than the annual mean wage for all occupations in the country. The pay of accountants might vary depending on location, industry and seniority.

Who it’s best for: Business owners who don’t have the time or resources to do it themselves and can afford to hire an in-house employee(s).

Pros	Cons
They are familiar with your company’s culture and practices They know your company’s financials, including all aspects of accounting They’re experienced in their field and can work with you to come up with a solution that fits your needs You’ll have more control over the quality of your accounting process and will be able to get it done quickly, so you can focus on more important tasks	Hiring an in-house accountant can be quite costly—you’ll have to pay them full time as opposed to paying hourly or per project Having to hire an accountant, especially one who fits with your company culture, can be hectic and time-consuming

Outsource to an Experienced Tax Pro or CPA

Outsourcing your projects to experienced tax pros or CPAs is one of the best ways to ensure that your business’s accounting needs are being met. They can help you with all aspects of accounting including cash flow management, business planning and budgeting, and tax returns for small businesses.

CPA wages are not separately reported by the BLS but its report for Accountants and Auditors indicates that the lowest 10% made less than $47,970, and the highest 10% earned more than $128,970. Indeed shares an average base salary of $78,947 and some others estimate a CPA salary to go up to $147,000 for manager positions.

Who it’s best for: If you’re unsure about how best to handle accounting tasks such as payroll taxes or bookkeeping duties, working with a professional is recommended so that they can provide guidance based on their expertise in these areas as well as yours.

Pros	Cons
They can help you with your taxes and ensure they are done right Hiring a CPA will help you make better financial decisions and avoid costly mistakes Having someone else handle the workload allows you to set aside more time for other important tasks They will be able to help you better manage your cash flow by keeping track of expenses and revenue so that they don’t get out of hand	They may not know the company’s business model or culture, which can be problematic if you want them to work with your team Outsourcing can be costly. You may have trouble finding someone who will work within your budget constraints. Some professionals charge an hourlyrate while others charge a flat fee based on their experience level

Do It Yourself

If you’re comfortable with numbers and the process of accounting, you can try to do it yourself. You’ll want to make sure that your bookkeeping software is up to date and compatible with your business’s needs.

The average cost of handling your accounting yourself may hover around $1,000 per year, considering that you’ll incur internal expenses and pay legal fees.

Who it’s best for: Small business owners on a tight budget who can afford to dedicate time and energy to accounting matters.

Pros	Cons
You’ll be able to control exactly when your accounting is done, which means no long waits for invoices or bills to be processed You get to save more money, which would have been unavoidable if you hired an employee or outsourced your accounting services	You have to be aware of all the different rules and regulations (e.g., tax laws) that apply to your business. This can be exhausting to learn as an entrepreneur It takes time. Not only do you have to fit it in with your busy schedule, but you also devote less time to other important parts of your business and may end up doing a not-so-good job across all operations

Bottom Line

If you are ready to take it up a notch or want to establish your own business, a CPA can offer invaluable guidance and help you decide how to structure your business. If cost is a major deterrent, you can leverage accounting software for your business needs.