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Picture this: You’ve just opened a letter from the IRS. Your heart races as you read the first line: “We’re auditing your tax return.” Then, your anxiety spikes as you recall the number of mistakes you made on that return. If this scenario sounds familiar, you're not alone. IRS audits can happen to anyone, even those who take great care to file their taxes accurately. And they're stressful. For many small business owners, the best way to alleviate the anxiety associated with corporate tax accounting is to hire a certified public accountant (CPA).
In this blog, we’ll discuss how a CPA can help with tax problems like audits and when it’s time to hire one for accounting services for small businesses.
Table of Contents
What Is a CPA and What Do They Do?
A CPA, or certified public accountant, is an accounting professional who has earned a license to provide accounting services to the public. To become licensed, a CPA must possess at least a bachelor’s degree in accounting (or a related field) and pass an exam administered by the American Institute of Certified Public Accountants (AICPA).
CPA vs. Accountant: Key Differences Explained
Many states also require CPAs to gain valuable work experience before obtaining a license. CPAs can work in a variety of settings, including large and small accounting firms, private businesses, and government agencies. They may also be self-employed. While all CPAs are accountants, not all accountants are CPAs. The main difference between the two is that CPAs have obtained a license from their state’s board of accountancy and maintained it by fulfilling ongoing education requirements. This ensures that CPAs are knowledgeable about the latest tax laws and accounting practices.
Key Roles and Services Offered by CPAs
CPAs provide sound financial advice for your business as you continue to grow, so you can concentrate on running your business. These are the general responsibilities you can expect from a CPA:
Taxation Services
A significant service area for CPAs is advising clients on tax strategies and preparing their tax returns. Many CPAs specialize in this area, and perform no other services.
Audits and Reviews
The primary task of the CPA is to audit the books of clients. Suppose the resulting financial statements of a client meet the CPA's evaluation criteria. In that case, the CPA will issue an auditor's opinion concerning the financial statements that accompany the statements when they are issued to third parties. A lesser form of an audit is a review, which clients may prefer due to its lower cost.
Consulting Services
Clients may ask a CPA to engage in various consulting activities, such as advising on the adequacy of a system of controls, outlining possible strategic options, or assisting with the installation of information systems.
Forensic Accounting
Some CPAs specialize in forensic accounting services, where they reconstruct destroyed financial records or investigate whether fraudulent activities have occurred. In some cases, they are expected to testify in court as to their findings.
Financial Planning
A CPA may provide financial planning advice to a client, such as guidance on transferring a business to a buyer with minimal short-term tax impact on the client. This area can expand to include estate planning, allowing clients to bequeath assets at the minimum tax cost to their recipients.
Litigation Services
A CPA can provide much of the detailed analysis required by an attorney to present a winning case in court. These skills are necessary for divorce settlements, disputes between businesses, bankruptcy proceedings, and other similar matters. An experienced CPA may provide expert testimony as a witness.
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Can a CPA Help With Tax Problems
If you’re facing tax problems, a CPA can help you understand the extent of the issue. They can walk you through your notices or IRS audit to help you know what they mean and how to resolve them.
Specialised Expertise: How to Find the Right CPA for Your Tax Problem
Not all CPAs focus on the same area of tax. Some specialise in:
Tax Planning: These CPAs help identify deductions, structure income, and manage expenses to minimize tax liability legally and efficiently.
Compliance: These professionals focus on state and federal tax laws, ensuring businesses follow the rules and minimise the risk of penalties or audits.
The right CPA for your needs will depend on the nature of your tax issue, whether it involves finding savings or resolving compliance issues.
Reducing Liability and Preventing Future Issues
A CPA doesn’t just resolve existing tax problems. They also help you take preventive steps, such as:
Reviewing past returns to identify errors or overlooked deductions
Advising on correct classification of workers (employee vs contractor)
Guiding on sales tax requirements if you operate in multiple jurisdictions
Helping to structure your business in a more tax-efficient way
In short, if you’re facing tax problems, especially involving the IRS or complex compliance issues, a CPA offers both the qualifications and practical experience to help resolve them and prevent similar problems in the future.
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8 Common Tax Problems a CPA Can Help Resolve
1. Late Filing or Missed Deadlines
Missing a tax deadline can lead to penalties and interest. A CPA can prepare and file overdue returns promptly and accurately. They may also negotiate with HMRC or other tax authorities to reduce penalties where there is a reasonable cause.
2. Errors in Previous Returns
If you realise a mistake on a previous return, such as incorrect income reporting or omitted deductions, a CPA can file an amended return. They’ll also handle communication with HMRC and help ensure you remain compliant going forward.
3. Facing a Tax Audit
Being audited can be stressful. CPAs are qualified to represent you during the audit process. They’ll gather and organise documentation, liaise with tax authorities, and ensure that your rights are protected throughout the review.
4. Unpaid Tax or Outstanding Debt
If you owe back taxes, a CPA can work with the IRS to arrange a manageable payment plan. In some cases, they may also seek reductions or abatements of penalties and interest, depending on your situation.
5. Complex Income Situations
Income from multiple sources, such as self-employment, investments, or rental property, can make the filing process far more complicated. A CPA can clarify your obligations, ensure accurate reporting, and help you claim all allowable deductions.
6. International Tax Matters
Cross-border income or residency questions often create confusion. A CPA experienced in international tax can guide you through double taxation treaties, reporting requirements, and residency status issues.
7. Lost or Missing Documentation
If you've lost key tax documents (e.g. receipts, forms, bank records), a CPA can help reconstruct your financial records and advise on acceptable alternatives. They may also contact IRS on your behalf for additional guidance or official copies.
8. Tax Notices, Disputes, or Investigations
Suppose you’ve received a tax notice or are under investigation. In that case, a CPA can draft formal responses, appeal any penalties you believe are unfair, and serve as your authorised representative to help resolve the matter professionally and efficiently.
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When Should You Hire a CPA for Tax Problems?
Tax problems can be a nightmare. If you have always handled your tax situations on your own, you may be tempted to continue doing so. As you transition into complex tax matters, seeking professional help is essential. Business taxes differ significantly from personal taxes. Once you begin hiring employees, operating in multiple states, or selling internationally, your filing and reporting obligations grow more complicated. A CPA can save you time, prevent costly mistakes, and ensure you meet your obligations accurately.
If You Receive a Notice from the IRS
Receiving a notice from the IRS can be alarming. If the IRS sends you a letter requesting information or worse, informing you of an audit, a CPA can represent you directly. Unlike general accountants, CPAs are licensed to interact with the IRS on your behalf. They can help gather the proper documents, clarify any errors or concerns, and present your case appropriately to resolve the matter efficiently.
You Want to Minimise Your Tax Liability Legally
A CPA doesn’t just look backward. They help you plan. By reviewing your financials, they can suggest strategies to reduce your tax liability for the coming year, ensure you’re taking advantage of all legitimate deductions, and avoid red flags that may lead to an audit. They’re especially valuable when tax laws change, such as during reforms like the Tax Cuts and Jobs Act.
When You’re Unsure Which Deductions Are Safe
Business owners often walk a fine line with deductions. For example, how do you handle expenses such as home offices, personal phones used for work, or a car used for both business and personal purposes? A CPA can give clarity on what’s deductible, and what might raise suspicion, so you stay compliant while maximizing your savings.
If You’re Starting or Formalising a Business
At the start of a business, you need guidance on which expenses qualify as startup costs, how to set up your accounting system, and whether your activity qualifies as a business or a hobby in the eyes of the IRS. A CPA can advise on structure and tax classification, setting you on the right path from the start.
During Significant Business or Personal Life Events
Life changes can affect your business. Whether it’s a divorce, the passing of a co-owner, or succession planning, these events often have financial and tax implications. A CPA can help you calculate the business's value, prepare financial statements, and assess the tax implications of any transitions.
If You’re Considering Business Financing
Planning to take out a business loan? A CPA can help you determine how much you need, whether the terms align with your goals, and how to prepare accurate financial documents for lenders. They can also help you understand the loan’s impact on cash flow and long-term tax planning.
Book a Call to Learn More About our Accounting Services (Trusted by 400+ Startups)
Let your business take flight while Haven manages your financial runway. Built by founders for founders, we handle everything from daily bookkeeping to complex tax filings and R&D credits that put cash back in your pocket, as well as fractional CFO services. Join 400+ startups who've saved millions in tax credits, countless hours of administrative work, and never missed a filing deadline - all while accessing 24/7 Slack support from CPAs who understand the unique challenges of growing businesses. Book a call today to learn how our dedicated team can help you focus on building rather than bookkeeping.
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