Do I really need a CPA for my small business?
It doesn't matter how small your business is, even a single owner with no employees, there are compelling reasons to consider CPA services.
1. State License.
The title CPA, or Certified Public Accountant, can only be used by a person licensed to do so by their state. Acquiring and maintaining that license requires years of study and constant ongoing education to stay current on tax law. The title "Accountant" has no such stipulation, and may not have any license. Be sure to look for "CPA" after the person's name. Another designation one might see is "EA" or Enrolled Agent. This designation indicates they have passed an IRS exam, but this is not the same as CPA and EA's are not held to the same standards for licensing as are CPA's. The exam a CPA must pass includes many facets of finance and tax expertise, and the CPA must diligently follow tax law changes to properly serve their clients, and to maintain their license.
2. Tax planning and preparation.
Not every CPA will specialize in small business taxes. All CPA's, however, are required to stay familiar with the dynamic tax laws. Understanding of US tax code is a substantial portion of the CPA exam and many CPA's will take classes each year to ensure their own understanding of current tax code.
The IRS requires each tax preparer to have a preparer tax id number (PTIN) and distinguishes between EA's (enrolled agents), CPA's, attorneys, and other un-credentialed preparers. An accountant that is not a CPA may be able to prepare, and even sign, your tax return, but you have no assurance of his or her ability or competency and may have limited representation rights, or no representation rights with the IRS.
3. Detailed analysis and advice.
While a bookkeeper does your routine data entry like one does in QuickBooks and an accountant will review the data and put together your important financial reports like your profit and loss statement and balance sheet, a CPA can do more in-depth, detailed, analysis of your monthly and yearly reports to advise on various financial matters. The CPA's training has prepared, qualified and certified them to give trustworthy tax and financial advice.
A strong argument in favor of choosing a CPA to prepare your business taxes is the authority to represent you to the IRS in the event of an audit. Non-CPA accountants, except EA's, are severely limited in their ability to represent you or otherwise work with the IRS on your behalf or under your authority.
Because all business are unique, there is no simple blanket answer to "Do I really need a CPA for my small business?". There is, however, a strong argument in favor.