One of the most important decisions that you will make as a small business owner is choosing an accountant and tax advisor. In addition to being important, is can also be one of the most intimidating because this is a relationship that extends beyond just bookkeeping and will provide guidance and advice as your business grows.
You should acquire an accountant as soon as you start your business in order to set up the proper legal structure. An incorrect legal structure can wind up costing you a lot in taxes and legal fees to correct. If you are buying a franchise or other small business, an accountant’s evaluation of the financial records is absolutely necessary.
Don’t make the mistake of delaying to involve an accountant until tax time. Working with an accountant to set up the proper procedures for record keeping and financial projections can help you to avoid costly tax problems.
Research and Interview
Your relationship with your accountant is a relationship that deserves your time and attention. Even solo entrepreneurs will benefit from establishing a solid relationship with an accountant who can aid in setting up the business correctly and assist with questions as you grow.
As a small business owner, you should interview small accounting firms that can provide you with the personal time and attention that you will need. Beware solo accountants who may not be able to spend time answering many of your questions because of their own workload. Regardless of whomever you choose, you need to make sure that you feel comfortable as you will be dealing with sensitive personal financial information.
Some strategies that will help you choose an accountant or firm that best suits your needs are:
Marshall Persky, a SCORE mentor and former chairman advises “…to build a shortlist of accountants that you would consider ‘partnering’ with because that is exactly what you are doing by hiring a business accountant.”
- Interview in person so you can gauge your level of comfort.
- See if they have experience with your specific industry. Accounting metrics can vary substantially by industry so you’ll want to hire a firm that has substantial experience in your are. It is also imperative that the accountant or firm has experience handling small businesses.
- Verify credentials. A CPA (Certified Public Accountant) designation is preferable and they should have access to current tax information. The AICPA (Association of International Certified Public Accountants) maintains a directory of accounting companies that you can choose from or try to get a referral from another local small business that you trust. The SBA (Small Business Association) suggests inquiring with your local Chamber of Commerce for networking events. Your business bank may also be able to aid you with suggestions.
In addition to assisting you in legally structuring your business, an accountant can also be very helpful in dealing with your bank’s loan officer and the bank’s requirements for particular financial reports. When choosing your accountant ensure that they are always available to answer your questions with clear explanations – no technical jargon. It is imperative that you understand what you are doing financially and why you are doing it.
Make sure you keep yourself updated. The accountant should be accessible during the year to guide your financial decisions in growing your business and understanding your cash flow.
Define Your Needs
Be honest about how much time you can devote to preparing, updating and maintaining your financial records. Can you maintain your own accounting software? If not, you will need to keep organized records – and no that doesn’t mean shoeboxes of receipts. See if your accountant can provide some training for you.
Remember that your main responsibility is to run your business so don’t take on more than you are capable of handling. If necessary, Make a list of requirements that you would want the accountant to handle because records that are not maintained correctly can be costly.
If you are handling the daily accounting, allow your accountant access to your cloud payroll and accounting services. This will enable the accountant to keep updated and will reduce the costs physical meetings and printing reports.
Make Sure You Are Covered For Taxes
Tax season is particularly hectic for both the small business owner and the accountant.
Avoid the last minute tax crunch. Schedule a meeting with your accountant at the start of the year and supply all the relevant files and documents as early as possible.
Find out how your accountant handles a government audit. These can be very costly in time, money and stress. In the event you would need one, it is essential that you have a good accountant to assist you.
Use your accountant to aid in tax planning so you can avoid unexpected tax bills.
What Are the Costs?
The costs associated with hiring an accountant or accounting firm are very important to discuss, especially for the small business owner. Very often, you may not be able to afford a retainer structure. Even if that is the case, you will hopefully be able to develop a relationship with the accountant or accounting firm you choose that will allow you to utilize their services strategically as you grow. Efficiency with your record keeping and timely updates will help toward keeping costs down. The expense is still worth your time as good accounting is needed to run your business effectively and avoid costly financial errors.
Taking the time to establish a solid business relationship with an accountant who you are comfortable working with will pay off in time and money. Now that you’ve bought into the need for an accountant, stay tuned for more tax tips and tricks as tax season approaches!
Whether you are a business, individual, or non-profit, we can outline specific steps you should take to minimize taxes, maximize loan eligibility, and enhance the value of your property.
For more information, contact us at info@czarbeer.com or (212) 397-2970.