Savvy business owners know that an accountant can be their greatest asset come tax season, but fewer may be aware of the advantages an accountant offers outside of tax planning. Deron Hamilton, co-owner of Denman, Hamilton & Associates in Little Rock, said his firm works to provide clients with a clear picture of their finances to help them manage and grow their businesses.
Deron Hamilton
“What I like to do is to empower business owners to be able to effectively evaluate their business so that they can make good decisions and they can create wealth and just overall build their legacy,” he said. “That’s what I’m about — building legacies for business owners.”
Co-owner Neil Denman added that more firms are broadening their services as they seek to add value for business clients.
Neil Denman
“It’s not just about getting your taxes done,” he said. “What people really seem to miss out [on] is everything else that we’re capable of doing from a planning perspective, whether that’s helping to reduce a tax bill, evaluate a business decision or helping them through figuring out what’s important to the business and what their long-term strategies are.”
Cassandra Forbes, owner of Forbes & Associates in Cabot, said accountants can help business owners avoid pitfalls that could derail their businesses. Comingling personal and business funds is the No. 1 mistake she sees small-business owners make, she said, but another common oversight is relying solely on bank statements when keeping track of finances.
Cassandra Forbes
“We have to make sure that all monies in and out are accounted for. The credit cards have to be included. Otherwise, you’re going to leave money on the table,” she said. “You take all of the income and the expenses, do your magical math, but then you also have to factor in all of the assets that the company has. There are so many numbers that go together to paint the actual picture rather than just look at a bank account and say, ‘Oh, I have $15,000 here.’”
Knowing the full story is important when it comes to making changes at the business, she added.
“If you’re looking to sell a business, if you’re looking to acquire a business, if you need an injection of operating capital or a line of credit or equipment loans, you have to have those numbers,” she said. “No bank is going to give you a loan without having solid financials.”
Melissa Cary, tax partner at Landmark CPAs, agreed that partnering with an accountant can help business owners make critical decisions about their businesses. For example, knowing the numbers can be key to deciding whether to open or close a location or whether it is prudent to hire more employees.
Melissa Cary
“That’s where the consulting piece of our profession comes into play, and I feel like it’s the most valuable to business owners than just a bank reconciliation,” she said. “That stuff has to be done, too, tax returns have to be done, too, but when the CPA can help the business owner make decisions that lead to the profitability or the expansion or whatever goal they’re trying to achieve, whatever that looks like, that’s where the real value is.”
That said, tax preparation is an important part of business ownership and one that is becoming increasingly complicated. The IRS is still dealing with lingering impacts from the COVID-19 pandemic on top of backups from the recent government shutdown, Cary said, and there has been a “roller coaster of changes” to tax laws since 2017.
“I feel like it is important for people to rely on tax accountants to make sure that they are following the latest set of regulations and rules and getting the most benefit from them,” she said. “Because there are so many different rules, it’s hard to know them all, and that’s when relying on a CPA or tax accountant, someone to help you prepare your taxes, is really going to be beneficial, especially with the state of the IRS right now.”
Waiting until tax season comes around to hire an accountant is one of the worst things a business owner can do, said Kelly Phillips, shareholder and leader of the tax department at Bell & Co. In fact, it is best to partner with an accountant before the business has even formed.
Kelly Phillips
“If you wait until all of that is done and the financial person you are choosing is an afterthought, they come in at the end of the process, you’re setting yourself up to have a bunch of issues that they then have to clean up, which wastes your time and money because they’re having to go back and fix things,” she said. “It’s always a whole lot easier to bring in either your tax side or your assurance side on the front end to help you plan and establish where you’re going rather than have them try and clean up something in the end.”
Talking with colleagues at professional organizations can help business owners find an accountant who meets their needs, she added.
“You don’t always want to go with the person that says, ‘Yeah, I never owe any tax. I never have to pay anything,’” she said. “That is not necessarily the sign of a good accountant. You want to ask them a few questions about do they partner with you, are they available, do they have other people in the office who, if they are gone, can assist you in some way, and then meet with them, see their face.”
Getting to know an accountant can be key to determining whether he or she is a good fit, Denman said.
“I think in order to choose the right accountant, you’ve got to ask questions,” he added. “You’ve got to be willing to answer some questions. Not everybody’s the right fit. A lot of places are looking for somebody that is going to provide everything at the absolute lowest cost, and that’s not always the case. Sometimes paying a little bit more enables you to get these other services, but you’ve got to ask.”
Barrett Belew, assurance partner at HoganTaylor and president of the Arkansas State Board of Public Accountancy, added that hiring an in-house accountant or working with a firm each have costs and benefits for business owners.
Barrett Belew
“It’s hard for companies to find good accountants in today’s age, and so the company has to weigh the cost-benefit of trying to bring someone in-house or outsourcing that to a firm like ours,” he said. “One of the benefits of outsourcing it is that you’re getting all of the expertise and experience that a firm has versus just one person.”
He added that business owners can check the state board’s website to ensure accountants are licensed and in good standing.
Accountants are beginning to utilize artificial intelligence, he said, adding that it is important to mitigate potential risks to client data. Hamilton said new technology allows accountants to provide a better quality of service while allowing them to meet client needs more efficiently.
“If you’re committed to using it, there’s a great opportunity there,” he said. “There’s efficiencies in software and technology that we’re using to become more efficient. We’re using AI to do things. We have some great tax planning tools that weren’t available not too long ago.”
However, he and Denman added that accounting tools driven by artificial intelligence are no match for a personal relationship with an accountant.
“I think it’s important that technology’s not the end all, be all of everything,” Denman said. “That’s why working in more of a partnership relationship with your accountant is very valuable because even with some of the advanced AI’s out there, it’s not always accurate, it doesn’t always give you what you’re asking for, and it’s not always interpreted and explained to you in a one-to-one manner that you might need.”
Artificial intelligence has helped accounting firms accomplish more with smaller staffs, Cary said, adding that AI has also changed the role of entry-level employees, who now do more analytical work rather than data entry.
“It’s almost changed their mindset and how they look at things from an analytic perspective really early on in their career, which I think has advanced our profession,” she said. “There’s just fewer of us. There’s more tax laws and more taxpayers and less CPAs than there has ever been, so we have that problem, as well, but AI is by far the biggest trend right now.”
With an eye for bringing more professionals into the industry, Arkansas is in the process of changing its laws to allow an alternate path to becoming a certified public accountant, Belew said. Rather than taking extra courses to reach the 150 hours needed to sit for the exam, prospective accountants will be able to pursue licensure after earning a bachelor’s degree in accounting and completing two years of relevant experience.
Arkansas was the first state to propose the change, he said, adding that other states have since enacted their own laws providing for the alternative pathway.
“Now I think roughly half the states have already implemented this change, and all the states will follow,” he said. “We are proud to lead the way on this effort, and we’re also very proud that we have a supportive governor who sees the value in getting more people into accounting.”
In addition, he said, the state board recently started the Arkansas Resident Initial Exam Support Program to help reimburse up-and-coming CPAs for the cost of their exams. He added that he supports efforts to integrate accounting into science, technology, engineering and mathematics programs to expose K-12 students to the profession.
“There is no reason why we shouldn’t, one, for just the betterment of the student, be teaching them personal finance and teaching them basic accounting terminology and understanding at the high school level and making that mandatory through STEM,” he said. “That’s something that I think will become a fight in the future not just in Arkansas, but that’s a nationwide effort there.”
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