Often, small businesses use in-house accounting instead of hiring CPAs from a reputable accounting firm Naperville, IL, to do their accounting. They want to save money as they do not need to pay for a full-time accountant. But over time, the lack of experience will show when this employee makes mistakes. Keeping accounting in-house can lead to the following mistakes:
Relying Heavily on Accounting Software
Business and accounting software can have lots of shortcomings. For instance, accounting software is not designed to handle complicated taxes or provide a solution specific to an industry. Because of this, businesses must use accounting software only for general activities and simple tasks. And they must rely on a CPA for complex tasks.
Failing to Take Advantage of Tax Deductions
With available software for both accounting and tax preparation tasks, doing taxes has been easier than ever. However, every business requires a specific way to handle their taxes, and using the software may not cut it. Companies that use tax software programs can lose out on possible tax deductions. In some instances, this can result in tax penalties if mistakes happen.
Not Thinking Long-Term
An in-house accountant who only concentrates on everyday tasks may have difficulty looking at the future. But an outsourced CPA will consider what lies ahead. A long-term mindset helps business owners make informed decisions, such as deciding which area of their company to develop or picking which investment to make. Thus, companies that only depend on in-house accounting may miss out on growth opportunities.
There are many business functions within a company, and accounting is just one of them. As a result, this function can get pushed back for later. However, accounting must be handled year-round, and not staying on top of it will lead to several issues, such as missed deadlines and tax penalties. Also, balancing the books in a rush way can result in data entry mistakes. In fact, mistakes can also be done when labeling accounts.
In addition, delaying accounting tasks can result in delayed or unnoticed invoices, hurting a company’s relationship with its suppliers. And employees can get restless while they wait for their expected reimbursements.
So why would a company hire a CPA? The answer is that a CPA ensures all such issues do not exist. They have the expertise and knowledge to ensure all of their client’s accounts are in order. They can project what happens in the future for the business and determines opportunities to boost company growth.