Top 5 Reasons Why Your Small Business Needs an Accountant

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Was your business tax return more complicated than expected in 2024? You might need an accountant. See why small business owners should hire a CPA. [[{“value”:”

The end of tax season is a good time to reflect on the value of professional tax help, especially for small business owners. While the IRS is trying to make it easier for many individual taxpayers to file their own taxes faster, cheaper, and even for free, small business owners often need an accountant.

If you’re starting a business or ramping up your side hustle into a full-time income, you might want to start thinking about hiring an accountant. As a longtime freelancer and small business owner, I’ve been working with the same accountant for over 10 years, and it’s always been money well spent. I don’t know why any small business owner would want to go through the hassle and stress of doing your own taxes. Get an accountant, and spend your time more profitably.

Let’s look at a few reasons why your small business should hire a CPA or other professional tax advisor.

1. File your business (and personal) tax returns

It’s true that not everyone needs to hire an accountant, and perhaps not even every small business owner. If your business is simple and you don’t have a legal business entity with an employer ID number (EIN) that is required to file its own tax return, you might be able to file your own taxes with one of the best tax software programs.

But for all other business owners, hiring an accountant makes everything so much simpler. When you work with an accountant for your small business taxes and personal tax returns, the accountant can take care of all the paperwork at once, all in one place. The tax returns get filed on time and the tax refunds (if any) arrive promptly; I’m no longer stressed about tax season, because my accountant has made the process into a well-oiled machine.

2. Find opportunities for tax savings

Working with an accountant can help you get professional tips on the latest changes in the IRS tax code, and personalized advice on how you could handle your small business tax situation differently. For example, a small business tax accountant can help you set up your limited liability company (LLC) to file taxes as an S Corporation. This can give you extra financial flexibility for payroll taxes and the tax treatment of your business income.

A good accountant doesn’t just know how to file tax returns; they can also answer questions and give big picture advice throughout the year. Your accountant can help you make better moves in your overall personal finances as a small business owner, and maximize your tax advantages.

Whether it’s understanding the qualified business income deduction, or recommending how to set up a SEP IRA or other small business retirement plan to invest for retirement, accountants can help you manage your money in a tax-efficient way.

3. Offer an extra set of eyes to get details right

I write about taxes for a living and I’m exceptionally detail-oriented (and sometimes even passionate) about filing my taxes and estimating how much tax I owe throughout the year. But even for a tax-savvy business owner, it’s a huge relief to know that you have another set of (professional) eyes on your tax returns.

4. Be in your corner in case of an IRS audit or tax bill

Hiring an accountant can give you an ally and supportive assistant in case you have to deal with the IRS. You as a business owner and as a taxpayer are ultimately responsible for the information on your tax return, of course. And your accountant will expect you to provide them with accurate, up-to-date information about your business income and expenses.

But sometimes mistakes do happen, and taxes can be underpaid or underestimated. Having an accountant in your corner can help you navigate possible questions from the IRS, or understand your options in case of an IRS tax audit.

5. Recommend future tax planning strategies

One other big advantage of hiring an accountant is how they can help you think ahead. A good small business accountant should not just be focused on this year’s tax return — they should help you plan for the future and adapt your tax strategies as your business grows.

If your business is making more money than ever or suffering through an industry-wide downturn, an accountant can help. If you’ve experienced a big financial windfall in your business, like a big new contract or a new client, or selling shares of ownership of your business to new investors or partners, an accountant can help. If you’re going through big changes in your personal life and personal finances, like the arrival of a new child, a divorce, or receiving an inheritance, your accountant can help you navigate the tax implications.

Bottom line

Some tax-savvy entrepreneurs might struggle with the idea of paying money for an accountant if you can do the work yourself (or use tax software). But small business taxes are often more complicated than personal tax returns, even for relatively simple businesses.

Hiring an accountant helps you get your taxes done right, and it helps you save time (and ultimately money) by freeing you up to do more of what you do best as an entrepreneur. Working with an accountant can unlock significant value for your life as a business owner, not just during tax season, but all year round.

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