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A Guide
to Understanding and Using CPA Services
The CPA as Advisor to Small
Businesses
More than 300 new small businesses open
their doors every business day in the United States.
Their ability to survive depends, in large part, on their
ability to plan for the future, while meeting the present
challenges of today's ever-changing business environment.
Certified public accountants (CPAs) are the premier providers
of business advice and technical assistance to small
businesses.
CPAs are professionals, distinguished from
other accountants by stringent licensing requirements.
They must have a college degree or its equivalent, pass
a rigorous national examination, and meet certain experience
requirements to qualify for a state license. Once licensed,
CPAs are governed by a strict code of professional ethics.
CPAs' technical knowledge, training, and
business experience enable them to help small business
owners find solutions to their day-to-day problems. For
example, CPAs provide accounting and financial services
on an ongoing basis, review and make recommendations
to improve internal accounting and administrative controls,
help businesses secure loans, and prepare cash flow projections
that show how the loans will be repaid. CPAs also provide
advice to business owners on problems unique to the industries
in which their businesses operate and help them make
informed decisions, such as creating succession plans
to effect a smooth transition to a new owner.
By providing accounting and auditing services,
tax services, management consulting services, and financial
planning services, CPAs help small businesses prosper
and face their competition with confidence.
Accounting
and auditing services
CPAs can assist small business owners by
providing the following services in connection with financial
statements:
- Performing an audit, a review
or a compilation of financial statements
- Performing an agreed-upon
procedure engagement with respect to specified
elements, accounts, or items of a financial statement
- Performing attestation services
in conjunction with a forecast or projection
- Developing formats for regular
monthly or quarterly reporting
- Analyzing operating results
- Advising clients about the
selection or use of computer software to generate
financial statements
Consulting
services
Depending on the needs of the small business
owner, CPAs can provide consulting services in:
- Cash management.
- Risk management (insurance).
- Financing.
- Environmental compliance.
- Business valuation.
- Compensation and benefit
plans.
- Computer-based accounting
systems.
- Succession planning for family-owned
businesses.
- Mergers and acquisitions.
- Health care.
- Compliance with government
regulations.
- Litigation support.
- Total Quality Management.
- Feasibility studies.
- Software evaluation and design.
- Disaster recovery planning.
- Organizational restructuring.
- Human resources planning.
In addition, CPAs help small business owners
monitor and reduce production costs, control inventory,
and develop marketing and pricing strategies. They also
provide financial analyses, including evaluation of economic
projections and long-range planning objectives.
Tax services
Ever since the first federal law on income
taxes was passed in 1913, CPAs have been extensively
involved in tax matters. CPAs keep abreast of changes
in the increasingly complex tax system and can provide
expert tax advice. CPAs help small business owners with
tax compliance, keep them aware of tax law changes, and
help them choose among the available options and provisions.
They prepare business income tax returns, as well as
sales, payroll, and franchise tax returns. CPAs also
represent their small business clients before the IRS,
if necessary.
Since most business decisions have tax
ramifications, CPAs play an equally important role as
tax planners. In this capacity, CPAs advise small business
owners on the tax implications of proposed transactions
and provide assistance in overall planning. CPAs help
small business owners understand how transfers of ownership,
changes in inventory procedures, acquisitions and mergers,
and other transactions can affect their taxes. They also
can answer day-to-day questions about depreciation, contributions,
installment sales, and other specific tax problems.
CPAs provide advice on the tax effects
of various types of business organizations, including
sole proprietorships, partnerships, corporations, and
limited-liability companies.
Personal
financial planning
As personal financial planning advisors,
CPAs help small business owners make the right financial
planning decisions by analyzing their overall financial
and tax situations; helping them devise estate plans
and plans for retirement; and assisting them in risk
management, insurance planning, and developing an investment
philosophy, among other things.
Adding value
to the small business
CPAs make small businesses their business.
They approach each set of business, tax, and financial
problems with objectivity. They work with small business
owners to find solutions to these problems and to ensure
that companies are meeting their objectives. CPAs are
prepared to help the client recognize and deal with a
variety of business situations.
Whether small businesses are just getting
off the ground or have been established for some time,
CPAs can help put and keep them on the track to profitability.
AICPA
American Institute of Certified Public
Accountants
Communications Division
1211 Avenue of the Americas
New York, NY 00364775
1986 AICPA, Inc., rev. 1995 1 234567890 PR 998765
338693
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