As a small business owner, it’s extremely important that you gain knowledge about some of the financial options available. One of the best options that many small business owners overlook is that of incorporation. However, incorporating doesn’t just make you a business owner; it also provides many advantages. In fact, it has become increasingly popular for small business owners who seek a professional with extensive finance knowledge.
This type of expert is usually called a Certified Public Accountant (CPA). In general, small business owners can take advantage of all of the opportunities that CPA’s present. While large corporations often hire CPA’s to handle their taxes and accounting, small businesses can also benefit from a great CPA providing them with specialized advice about how to structure their business to reduce their financial risk. In addition, having a certified public accountant on staff can provide small businesses with the extra guidance and expertise they need to succeed.
Of course, not all small business owners and CPA’s are created equally. Some excel in certain areas, while others lack the proper experience and understanding needed to give small business owners the type of financial advice they need. Here are some of the common challenges faced by small businesses and the advantages offered by certified public accountants who have specialized knowledge of these issues.
Starting a small business means taking on significant risks. This inherently increases the amount of money needed to run a business. Unfortunately, the higher costs of starting a new company typically come from these higher startup costs. In order to minimize these costs, it’s helpful to turn to a professional who has experience in dealing with the finances of small businesses. With their specialized knowledge, CPAs can help small business owners deal with these issues.
Most small business owners find themselves strapped for cash during certain times in their operations. Whether it’s because of a sudden investment or loss of business, cash flow is often a real problem. CPAs can provide their clients with expert advice on how to manage their cash flow problems, thereby providing them with the extra cash they need to handle their business affairs.
When investors invest in a small business, they typically receive limited equity in the business. Because of this, investors have a lot more control over the day-to-day operations of the business than they do with a larger corporation. Unfortunately, some big business investors can be unscrupulous and take control of a company before the owners have a chance to regain control. With a CPA on their side, however, small business owners have greater access to the cash they need to solve immediate problems. CPAs have backgrounds in finance and accounting, so they can help their clients restructure their debt and improve their cash flow. Some CPAs work on a contingency basis, which means they only charge when their client receives a large sum of money from their investment.
Convertible debt can also pose a huge problem for new startup businesses. When an investor purchases convertible debt, they become the main creditor of the business. Because of this, the convertible debt must be repaid immediately upon the sale of the business. If the company’s financial problems are caused by poor management or they cannot generate enough income to repay the convertible debt, the investor may not survive the initial onslaught of creditors.
Lenders are willing to work with small business owners in order to find the best financing for their business loans. With so many applicants vying for financing, lenders are confident that they can secure the funding they need for startup ventures. If you have a low credit score, you may not be able to secure a startup loan from traditional lenders. However, your chances of securing funding through private lenders are much higher than your chances with traditional lenders. If you have a low credit score, there are several options for you to raise capital for your small business.