Save Money CPA

10 Practical Ways You Save Money With a CPA (Part 2)

You may find it hard to believe, but hiring a CPA will likely save you more money in the long term than it will cost you in the short term.

In Part 1, I described four areas of tax savings that a CPA can guide you through: entity choice, depreciation, tax deductions, and tax credits. In this post, I will share other areas where a CPA can save you money outside of tax optimization.

Business Decisions

Often the best use of an adviser is as a sounding board for opportunities as they come your way. They can keep you from looking at things through rose colored glasses, or show you something from a perspective you have not even considered.

They can guide you through the risks and rewards of a potential business decision and help avoid poor choices. They have experience with many other businesses within and outside of your industry to serve as examples of what can go right or wrong in many situations.

Drawing from their knowledge will save you from making costly mistakes that you would have made on your own using trial and error.

Hiring Decisions

There are so many choices to be made related to hiring and often not much time to make them in. First, you have to decide if you want to hire at all, or just use subcontractors. Depending on your business and how you treat your workers, the government may make this decision for you. Knowing the correct federal and state laws around who can be treated as a subcontractor can save you a huge amount of money and heartache.

Then if you do decide (or are required) to hire employees, you must make sure you are handling payroll taxes correctly. Each type of tax can have a different due date, and payment is often made separately from filing paperwork, so there are a lot of opportunities to drop the ball.

Health care, pension plans, life insurance, child care, and many other benefits can be offered as well, each with their own paperwork and payment schedules. There are entire industries built around payroll and benefits compliance, do you really want to take that on by yourself?

Products and Pricing

Something that is always difficult to decide on is how much you should charge for your products and services and which ones to feature.

Some business owners prefer the “spray and pray” method, where they will do just about anything and hope that they end up with a profit. But often the wisest choice is to carefully review with your adviser the products and services that you could potentially offer. Then, together, analyze the market and what you make the most profit on or sell the most of in volume.

With that information, you can adjust your pricing on the less profitable items, change your product or service mix, or stop offering some things altogether.

Budgeting and Cash Flow

Many business owners feel that they don’t need a budget or that they have a pretty accurate handle on their expenses within their own head. I can tell you from experience that this is wrong probably 90% of the time.

Unless your business is extremely small or you barely have any expenses, chances are the numbers in your head are not reality. A budget will keep your expectations aligned with reality, and tracking cash flow will make sure that you have money available when bills are due or you want to make a larger purchase.

A CPA can run different budget or cash flow scenarios for you so that you can avoid uninformed decisions, which often translate to wasted money in small businesses.

Questionable situations

Sometimes you’re just not sure what you are getting into. There are a lot of opportunities out there, good and bad, and your judgment can easily be clouded by being short on cash or having a close personal relationship with the person offering the “deal”.

A CPA functions as a neutral party to give you both sides of these kinds of situations and recommend actions to take. If it’s some kind of investment, they may have experience with that same type of transaction from other clients, or can find someone who has, and give you the inside scoop.

Even if it’s something they have never heard of, they should be more than willing to research it and give you a summary of what you need to know in layman’s terms so you have all the facts. Staying away from shady deals will definitely save you money.

Preferred service offerings

CPAs are almost always tapped in to a network of other professional service people whom they can recommend to their clients. They cross paths with a lot of them in their business so they typically have a variety of contacts within each different kind of service that they can match to your individual needs.

One caveat, though, is to make sure you know their specific affiliation with those service providers, as some may receive a commission for sending a client to a particular business. This doesn’t mean it’s not a good recommendation, it just means to make sure you understand up front if that relationship exists.

Professional Services

The main groups that CPAs typically are affiliated with are financial planners, payroll processing companies, and accounting software vendors.

Usually they have clients that use these services and recommend them, or they may even use it themselves, so they have first hand experience with the benefits they offer. Using these services through your CPA will often result in a better price for you, even if they also receive a commission.

CPAs also often know various attorneys, insurance agents, and bankers because of shared clients, and can recommend one based on your needs and goals. This is often very useful because it is difficult to know who to pick in those areas without personal experience.

Other service providers

If you choose a CPA from a medium sized firm, or one with close ties to the local community, they can also often recommend the services of others who are their clients.

They likely have building or trade contractors, IT professionals, marketing companies, realtors, and even doctors or dentists among their clientele who they would be happy to recommend to others. Sometimes these clients will offer a discount since you were recommended by their CPA and they didn’t have to do any marketing to gain your business.

I like seeing our clients succeed and I only work with reputable businesses, so it’s very easy for me to pass along contact information that another client needs, provided I have permission to do so from them. Everyone wins!

As you can see, there are many ways that a CPA can save you money, even outside the traditional expectation of tax savings.

Our job is to help you succeed, and when you lower your expenses, you are more profitable, so it is in our best interests to find ways for you to save. Plus, clients are more likely to stay with a CPA who has saved them money, so it helps us retain our clients as well.

Make sure you are taking all of these savings opportunities into account when you consider the costs of hiring a CPA.

Do you have a CPA for your business? If not, what is holding you back? Let me know in the comments below or on Facebook!

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