Most small business owners would rather not “do the books” themselves. A common mantra heard among small business owners is they plan to outsource their accounting the minute they have the funds. They’d do it sooner, but those numbers people are so pesky about getting paid.
Imagine you’re ready to take the plunge… Your hand hovers over the phone / keyboard / iPad to get someone, anyone, else to take over this headache. Just one question, what type of person should you call to help with accounting needs? Do you need an accountant? A CPA? A bookkeeper? Or even an EA? This is where most small business owners get stuck.
How to find the right help for your small business accounting needs
First let’s clarify what each of these groups are, what they are not, and more importantly, what they can do for small business owners.
- Accountant – This term is thrown around all the time, yet has very little value by itself. Quite simply the term accountant means, “One that keeps, audits, and inspects the financial records of individuals or business concerns”. Notice what is missing here? There is no minimum training requirement or certification process. While people often use the term accountant, what they really mean is a …
- Certified Public Accountant (CPA) – These are licensed accountants. They have completed specific training and passed a rigorous exam process. In addition CPA’s are required to complete continuing education, have a professional code of conduct, and must follow specific rules on how to accurately report financial statements.
- Bookkeeper – A bookkeeper records a company’s financial transactions. Common examples include recording expenses, payments received, and accounts payable. You do not need any special credentials to become a bookkeeper. This makes them significantly less expensive than CPA’s for the day to day accounting needs of a small business.
- Enrolled Agent (EA) – Wrinkling your nose a bit at this one? Wondering if I’ve gotten confused with another blog post? Nope. Per the IRS website, “An enrolled agent is a person who has earned the privilege of representing taxpayers before the Internal Revenue Service.” In Nicole-speak that means they are U.S. tax experts who can help small business owners get things right with Uncle Sam. To become certified they must have applicable experience working for the Internal Revenue Service or pass a three part exam. Continuing education is also required.
Small Business Accounting Matchmaker
Don’t worry, this isn’t The Love Connection. Although I have seen some truly infatuated people once they find a good fit to take over “doing the books”. Keep in mind you may decide to use more than one of these resources.
- Repetitive, mundane transactions should be handled by a bookkeeper. They can do this for you at the best price.
- Use a CPA for complex financial statements, as well as general tax filings.
- For specific or complex tax needs I recommend hiring an EA.
The Small Business Accounting Matchmaker in Action
Want to see my matchmaking skills in action? Let’s take a look at some common accounting needs facing entrepreneurs. I’ll give you my suggestion on who would be the best fit.
- You have a mound of receipts that have been waiting for 180 days to get recorded. BOOKKEEPER
- While your business makes money, you aren’t sure how much. You don’t really have a firm grip on financial statements and could really use someone to help you make heads or tails of all those numbers. CPA
- It’s tax time and you need some help pulling your financial statements together, including insights on the best tax position to take. CPA
- You’re working on a complex joint venture agreement, and need some insight into the tax implications for your business. ENROLLED AGENT
- You have a staff of three employees, and need someone to help with processing payroll every month. BOOKKEEPER
- You’ve purchased an accounting software or signed up for an online service, now you need someone to help you get it set up. BOOKKEEPER
- You’ve got the basic financials of your business covered. What you really need is help understanding the tax implications. ENROLLED AGENT
Have you outsourced your financials? Who do you use? Are you going to change? If you’re just taking the plunge now to get help with your accounting needs what is your game plan?
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