LongSchaefer prides itself on delivering high-quality business services, financial planning, and tax planning to businesses and high net worth individuals in the Greater Cincinnati area.
Today, we answer several frequently asked questions about accounting firms.
What is the purpose of an accounting firm?
An accounting firm identifies the best possible financial solutions for businesses, companies and individuals while helping those entities achieve their financial goals.
What does an accounting firm do?
Accounting firms help their clients, whether businesses or individuals, with a wide range of financial services such as accounts payable/receivable, bookkeeping, payroll processing, and payment processing. The overall goal is to make sure clients stay financially viable by helping owners understand the financial health of their businesses while making sure transactions remain legal and accurate.
An accounting firm generally hires people certified to handle financial transactions, including financial planners and certified public accountants (CPAs).
What is a CPA?
A Certified Public Accountant (CPA) has met state licensing requirements to earn a designation as a CPA as part of being an accounting professional. All states require education as an accountant at an accredited institute of higher education before taking and passing their state’s CPA examination.
What is the difference between a CPA and an accountant?
An accountant is any person who keeps and interprets financial records, usually for just a single company, agency, or organization. CPAs, in addition to receiving state licensure, can perform several services based on their educational knowledge and experience.
How can accounting firms help businesses?
Four popular areas of expertise for CPAs at accounting firms include, but are not limited to:
- Tax preparation and consulting, one of the most popular services for accounting firms.
- Consulting services to help businesses achieve their full financial potential.
- Financial planning for businesses and individuals.
- Litigation consulting for when/if legal issues arise, such as those for succession planning in business and estate planning for individuals.
Why are accounting firms important?
Accounting firms play essential roles in the financial vitality of businesses and individuals, from tracking income and expenses to ensuring legal compliance and accurate tax reporting. CPAs at accounting firms help you make business decisions.
Are accountants considered tax professionals and preparers?
Yes, although not all income tax preparers are accountants working for accounting firms. Both tax preparers and accountants are qualified to assist people in filing their income tax returns. However, tax accountants (CPAs) are qualified and licensed to provide long-term assistance to individuals and businesses with tax concerns, tax planning, tax advice, and tax strategies that help a company decide how to better manage income taxes year after year.
Why hire a tax professional?
There are several reasons why hiring a tax professional is a good idea:
- Reduce the chances of mistakes on tax documents.
- Better accuracy on your tax documents submitted to federal, state, and local tax agencies.
- Uncover possible tax benefits, deductions, and strategies to reduce tax liabilities.
- Give you practical tips and techniques to make sure you document all financial transactions correctly.
- Represent you during a possible audit.
- Lower your stress regarding your finances.
- Give you peace of mind with financial experts on your side.
What happens during an accounting audit?
An auditor creates a formal opinion regarding the finances of a business or individual based on an examination of a company’s finances to see if they comply with generally accepted accounting practices (GAAP).
An auditor does the following:
- Gathers information through bank accounts, accounts receivable, accounts payable, and payroll.
- Tests and compares numbers gathered from these sources.
- Forms an opinion as to whether or not the company is free of financial misstatement due to fraud or error.
Why is an audit important?
An audit is not necessarily a bad thing because when the auditor’s work is complete, your company receives a stamp of approval. This could help you when you try to apply for financing or appeal to investors.
Why should you hire an accounting firm ahead of an audit?
Audits, particularly from the IRS, can be completely random without any reason given. The individual audit rate is about 1 in 250, while individuals who earn between $200,000 to $1 million have an audit rate of about 1 in 100.
When the IRS sends you a notice for an audit, an accounting firm can prepare you for the process, discuss your finances with the auditor, and give you peace of mind that an accountant will accurately represent your books to the agency. Much like the auditor, an accounting firm will leave no stone unturned when examining your finances.
Do the benefits of hiring an accounting firm outweigh the costs?
Yes, the benefits of hiring an accounting firm may outweigh the costs due to several factors.
You might have lower costs than hiring FTEs. Your individual results may vary, which is why an initial consultation with an accounting firm is important.
Do accounting firms offer virtual consultations?
Yes, you can certainly discuss your company’s financial situation with an accounting firm virtually. Many accounting firms offer secure connections, and they must comply with privacy laws (notably, the Gramm-Leach-Bliley Act (GLBA), also known as the Financial Services Modernization Act of 1999) when consulting with you online.
Your company can also submit documents securely online, as well. Discuss any privacy concerns you may have during an initial consultation.
Do accounting firms offer free initial consultations?
According to a survey conducted by the National Society of Accountants, about nine out of every 10 accounting firms offer a free initial consultation. This consultation may last between 30 minutes to an hour, depending on the accounting firm.
Can you contact an accounting firm for an initial consultation?
Absolutely! Feel free to reach out to LongSchaefer if you’re interested in our business planning, financial planning, tax planning, or tax preparation services. Contact us online or call (513) 245-0300 for more information on how our accounting firm can help.