How Accountants Help Pennsylvania Small Business Owners

Pennsylvania is a welcoming environment for small businesses. CPAs and accountants in the state have so much to offer small businesses to help them survive and grow. Sometimes entrepreneurs try to cut corners and don’t realize how they may actually be costing themselves money or setting themselves up for fines, audits, or even bankruptcy without the help of an experienced accountant.

Your accountant will be your trusted advisor and partner in the success of your company. Here are just a few ways your accountant can assist you. 

Helping with your foundational structure: If your foundation is strong, everything you build on it will be strong. Even if you’re already in business, have an accountant review the basics with you. What’s your business entity? Are you a sole proprietor or an LLC? Is it time to move up to a corporation (S Corp or C Corp)? What lending options are best for your company? What bank accounts should be set up and how should income and expenses be divided into different accounts? What regulations may impact your business?

Developing business strategy: Business strategy may include having clearly defined goals; building your ideal client base; researching your market and your competition in a deeper way, looking for subtle signals to give you an advantage; determining how your product or service will differentiate you from the competition; developing your price-point; and determining what business steps may be necessary (business purchases or structure changes) to keep you competitive.

Developing financial strategy: This is the accountant’s strength. Your accountant can help you develop short-term and long-term strategies, maintain liquidity, and advise on loans, risk management, overhead and expense management, and major purchases. Making the wrong purchase at the wrong time could cost you your business. However, choosing the right purchase at the right time and the best method of depreciation can save on your taxes and ensure your financial health. 

Handling accounting so you don’t have to: You need to focus on sales and operations. Let your accountant manage the financial end. That would include bookkeeping, cash flow, and payroll; financial reporting; compliance with government regulations; quarterly tax payments and year-end tax preparation. Your accountant can also guide you in choosing and setting up IRAs or 401ks for your employees and yourself.

Advising on software and security: In addition to an accounting package that both you and your account can access, your firm may need robust job-costing, project-managing, or client-management software. You will also need to develop policies, protocols, and software shields to protect your company’s financial and business information as well as your physical location.

Avoiding audits: No one wants an audit! Once a company is audited, there is an increased risk of being audited again. Audits are time-consuming, anxiety-provoking, and can be costly. Your accountant can help you avoid them by looking for the most common causes of audits:

• Document discrepancies (1099s, K-1) or filing the wrong form

• Salary discrepancy: High profits but low officers’ payroll could trigger an audit to see if you’re trading payroll for profit distributions, thus avoiding payroll taxes.

• Income or profit discrepancies: Sudden swings of profit or loss, or losses year after year that don’t cause the company to close, look very suspicious.

• Classifying employees as contractors: The IRS may question too few employees for the operations of the company. There are regulations on what counts as a contractor versus an employee.

• Write-offs and co-mingling expenses: It is common for small businesses to mingle personal and business expenses and use of vehicles. It’s also common to write off too much. 

For these reasons and many more, hiring an experienced accountant can mean the difference between great business success and lackluster results–or worse, failure.