A CPA is mandatory if you need audited financial statements. However, a CPA may not be the best choice for other areas; experience may be more meaningful. A CPA has passed a demanding set of tests centered around general accounting principles. If after obtaining his license he continues to work for an accounting and/or auditing firm, he likely will have very little ‘hands-on’ experience of running a business. He may never have faced the human resource problems a small business owner has had to face; never developed or administered a marketing plan; or sweat out making the next payroll for his employees.

What are my other choices?

There are general accounting practitioners, people often with a tremendous amount of practical and applied knowledge, and enrolled agents (EA’s) in the IRS.

What are Enrolled agents?  An Enrolled Agent ia a Federally Authorized  Tax Practitioner.  They have demonstrated technical competence in tax law by completing and passing two days of testing.  They are the ONLY taxpayer representative licensed by the Federal Government to prepare tax returns for individuals and other entities.  They are required to maintain their professional skills by completing courses on a regular basis.

In summary, you hire an accountant for three reasons:

1. You don’t know how to do it.

2. You don’t have time to do it.

3. You don’t want to do it.

Make sure you feel comfortable with the accountant you select. Don’t overkill but get the best value for your money.