This is part VI of the small business tax series and focuses on how to choose a professional for your business needs.
Background
Not all professionals are alike. From accountants to attorneys to financial advisors, different types of professionals do different things for your business. This article will focus on what a professional can do for you.
Accountants
Unfortunately, there is no requirement to be an accountant in the State of Florida. Anyone can open an accounting practice. This section will focus on Certified Public Accountants and Enrolled Agents. These designations are licensed by different agencies. It is important to note that there are many unlicensed accountants in the State.
Certified Public Accountants (CPA), are very well known. They are required to take a test administered by the State that they practice in. They are required to complete continuing education every year, to keep their license current. Generally, CPAs are licensed by the State in which they operate in. Their license allows them to audit financial statements, and practice before the Internal Revenue Service. It is important to note that not all CPAs specialize in taxation, and do not keep up with current tax law changes.
Enrolled Agents (EA) are not as well-known as CPAs. Enrolled Agents are required to take a test administered by the Internal Revenue Service. They are required to complete continuing education every year, with a focus on tax and ethics. EAs are licensed by the U.S. Department of Treasury to represent taxpayers before the Internal Revenue Service. All EAs specialize in taxation.
You should hire an accountant in the initial phase of your start up. Whether you hire a CPA or EA depends on what your business requires. A majority of small businesses are interested in limiting their tax liability. If that is the case, you should look for an accountant that specializes in taxation.
Attorneys
Typically, a small business will use an attorney to form a corporation or LLC, to write by laws, to write partnership agreements, write contracts, etc. Very few times, will you need an attorney to handle a tax situation for your business.
When selecting an attorney, you should look for one that specializes in business matters. For instance, just because your divorce attorney did a good job handling your divorce, does not mean that they will do a good job for your business matters.
Financial Advisors
As a small business owner, you will probably consult a financial advisor to set up a retirement plan for your business. Like attorneys and accountants, not all financial advisors are the same. Some financial advisors specialize in one area, and another in another area. It is important to find one that specializes in the service that you need.
Choosing the right professional is paramount to your success in business. As you can see, you have a lot of choices. Make sure you interview several professionals to find on that will work for you.
Also see other articles in this series:
- Buying versus leasing of equipment
- The beauty of retirement plans
- Hobby Loss Rules
- All cash businesses
- Employees versus independent contractors
If you have any questions about this article, I can be reached via email at: craig@smalleynco.com
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