For the vast majority of businesses with revenues under $2,000,000 the answer is no. Unless, you have external requirements from bonding company, shareholders, finance companies, etc.
However, even if you don’t have those direct external requirements for Audited financials you should have your books at least “Reviewed” by an independent CPA. A Review is not just “hey, take a look”. A Review is a formal process that is less expensive than an audit but with many of the same benefits. What are the direct benefits to the business owner?
1. A look at your business through the eyes of business experts not involved in your small business day to day. These fresh eyes can show you how to improve profits, better manage cash, reduce risk, etc.
2. A reviewed statement will reduce the impact of “on the fly” accounting treatments that are often made by internal bookkeeping staffs. The review will add discipline which will make the financials more useful. For instance, do you now account for your cost of goods sold the same way every year, every month so that you can compare the information and make decisions accordingly?
3. It is much, much less expensive to get reviewed statements if you’ve committed to the review BEFORE the year begins. Going backwards is more work, much more work.
4. You may not think you need Reviewed books now but what if 18 months from now you are approached by a buyer who is willing to make you a great deal to buy your business but they only buy businesses with at least reviewed financials for 3 years. You could miss the opportunity of a lifetime. You need to commit to accurate reviewed books before you have any idea you will need them.
5. I assure you that a bank will be more likely to approve a loan to a business with reviewed books than a business without reviewed books. And what if having reviewed books means you don’t have to sign a personal guarantee for the loan? Big advantage there!!
If you want a small business that is easier to run, more profitable to own and more valuable to sell then start NOW to get your books reviewed by a qualified CPA.