The Language of Business: By the Numbers

Choosing to be a business owner comes with the responsibility of preparing the numbers that financially describe your firm. Know your choices on who should prepare your company’s numbers and in what format.

The most common professionals who prepare Tax Returns are Enrolled Agents and Certified Public Accountants (CPA). An Enrolled Agent usually focuses solely on the preparation of the tax forms. CPAs often provide financial statement preparation above and beyond the annual tax returns as well as financial advice on accounting methodology, corporate tax structures, financial planning , audit services, and much more.

An Enrolled Agent is either a former IRS employee or has passed a three (3) part test administered by the IRS giving that person the right to prepare personal and business tax returns. The CPA usually has at least a four (4) year college degree in Accounting and has taken a state exam, certifying them as an accountant. This level requires continuing education courses annually to keep the CPA designation and is considered a licensed professional at the highest level in the field of number preparation.

For most small businesses, the choice on which to use comes down to sophistication and fees. A company like ours, with no employees, and a simple legal structure uses an Enrolled Agent. Our previous dog swimming business used a CPA as we had multiple partners,
used training contractors and had larger pieces of equipment that needed to be depreciated in line with then current IRS depreciation policies. A more sophisticated business requires a more sophisticated level of professional accounting expertise.

So, as you look ahead and determine which of these number’s experts you should work with, understand the differences, interview each type, inquire with your peers about who they use, and enter your field with the confidence that you have chosen the right approach and right financial expert for your level of simplicity or complication and, of course, your budget.

Your company’s financial partner plays a critical supportive role in moving your business through financial requirements and hurdles. Much like the field a dog encounters in an agility competition, do your research, understand your best approach and clear the hurdles. A solid landing can always be achieved with proper preparation in the world of numbers or flying dogs!

Be well.