Five Ways Your Accountant Can Help Your Start-Up Company
Your New Company
When people start a business, one of the first things they tend to think about is whether they need to hire an accountant. While there are many who believe that hiring an accountant isn’t necessary until you start making a certain amount of money, hiring an accountant right when you open your business can be a desirable thing.
Here are five reasons that hiring an accountant during the start-up phase of your company may be a good decision:
Open a Bank Account
Whether you know it or not, it is never a good idea to merge your business and personal bank accounts into a single account. Having a separate business account can keep you from using personal funds to pay for business expenses. Your accountant can help manage your business account and ensure that you don’t need to use your personal finances.
Track Your Expenses
If you’re working on growing your business, you probably don’t have time to track every single expense that you have. As a consequence, it may be best to simply hire an accountant to track your expenses for you. The only thing you have to do is give them access to your mobile banking for your business or hand them physical records of any spending you do (including receipts and invoices).
Determine Payment Arrangements
Will you pay your employees on the 1st and the 15th? Will you pay them via a paper check or through direct deposit? While you may not have all the answers yet, your accountant can help you determine the best route to take. While these may seem like minor details, determining payment arrangements will not only help your company save time but it can also help your company track expenses.
Establish Tax Procedures
Establishing tax procedures is probably not a high priority on your “to do list” when you first start your business. But though it may not seem like a pressing matter to you, it is still an important box which needs to be checked off, and your accountant can help you do this right away. Establishing tax procedures will ensure that you are well prepared when tax season rolls around.
Determine How You Will Be Paid
As you complete jobs for your clients, you will want to be paid in the same manner every time. Determining how you as a business owner will get paid will not only save you from a headache in the future but it will establish clear boundaries between you and your clients.
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Four Ways You Can Make Your Accountant’s Job Easier
Accountants & CPAs
If an accountant has a natural ability with numbers and mathematics, it may be tempting to assume that his work is relatively stress-free. And while it may be simple to assume that an accountant’s job is already “easy” in such cases, there are still a few ways that you can make your accountant’s job even easier. Remember, the better your accountant’s situation, the better off you will be.
Be Transparent About Your Business Finances
Whether you tell your accountant about all of your business transactions or just certain of them, they will find out the full truth eventually, and instead of making their job harder by giving them sudden surprises you should be as transparent as possible. Your accountant is literally on your team to help you save and better manage your money, but he or she cannot help solve what they don’t know.
Coming to Business Meetings Prepared
Many accountants charge by the hour, and if you come into a meeting unprepared you’re going to end up spending money just to be ready to speak with them. Do you have all of your financial documents? Bring them. Do you have new receipts? Bring them. Thinking about making another big purchase? Know and share the price. Never underestimate the power of being prepared.
Take Your Accountant’s Advice Seriously
If your accountant gives you advice you can be willing to bet that the advice he or she gives you is not just for the sake of giving advice. Your accountant may not know every detail of your business, but they were hired specifically to help you and your finances. Taking the advice of your accountant seriously could not only save your business money but it could also save you from having to clean up messes in the future.
Consult Your Accountant on Financial Matters
No financial matter should be kept secret from your accountant. Every financial issue should be disclosed, including large purchases, alimony and child support, business lunches, charitable donations, employee bonuses, new hires, etc. While it may seem overbearing to always have to check in with your accountant, it’s important that you share these things with your accountant freely and completely because he or she can tell you what you can or cannot afford to do in the moment.
What successful ways have you found that make your accountant’s job easier? Leave your comments below.
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Top Ten Reasons to Hire a Professional Tax Preparer
Hiring a Professional Tax Preparer
When your business is growing, hiring a professional tax preparer may seem like a no brainer; however, some business owners choose to be cynical and refuse to hire a professional tax preparer, regardless of how beneficial hiring such a tax preparer may be. Even though hiring a professional may seem like an easy decision, perhaps you haven’t hired a tax preparer because you can’t really pin down the precise benefits a preparer can offer.
Here are the top ten reasons why you need to hire a professional tax preparer:
- Tax preparer’s eliminate the hassle of doing taxes yourself.
- You don’t have to keep up with changes in tax law
- Making mistakes can cost you a lot of money.
- Your time is valuable and the hours you spend preparing taxes yourself could be spent elsewhere
- If you do your own taxes and do it wrong you’ll have to represent yourself in an audit
- A tax professional can help you answer your tax saving questions
- A tax professional can help you plan all year
- A tax professional can offer solutions on how to save money on taxes
- Tax professionals give you peace of mind that your tax needs are met
- Hiring a tax professional can save you money.
While there are a host of other reasons why you should hire a professional tax preparer, the above are the most important and most obvious reasons why you need to do so in order to plan for the sound financial future you so eagerly want to achieve.
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How Much Should You Pay Your CPA
Paying Your CPA
When hiring any new person on your team, one of the first things you’re likely to think about is whether you will be able to afford the person you are attempting to hire. While there is no perfect way to determine how much you should pay your CPA, here is a list of criteria which should help you through the decision-making process.
Hourly
Hourly rates can vary dramatically based on your location, the services you can provide and your experience. While lower hourly rates are great, they don’t necessarily indicate better value. A more experienced accountant may charge more money, but then complete the task in half the time. Remember, you will always get what you pay for.
Proposal Basis
Before beginning work, most CPAs offer their clients an estimate of what their total cost will be for the entire project. Once an estimate has been given, the accountant will prepare a proposal that will estimate how long the tasks will take and then multiply the number of hours required by the hourly rate so that the client will know exactly how much money they will be paying up front. Instead of waiting to see what the invoice says, you’ll know what to expect right away.
Fixed Fee Structure
There will be several tasks which will require ongoing assistance from your CPA, such as: balancing books, payroll and posting transactions. Most of these tasks have a structured fee, meaning there’s one set cost each time these tasks are completed.
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Three Qualities No CPA Should Have
Bad CPA Qualities
We all know the qualities that every good CPA should have and we work hard to make sure that we hire CPAs who possess the qualities required to make our businesses both profitable and respectable in the business world.
While we may spend a lot of time working on trying to identify the good qualities CPAs should have, it is also important to be aware of the various traits which CPAs should not possess.
Here are a few qualities you should be sure your CPA does not possess:
Bad Money Management Skills
If your CPA is unable to manage money well they shouldn’t be your CPA. Most people hire CPAs because they struggled to successfully manage their own finances and hiring someone who struggles with this same issue is not a healthy decision for your business.
Yes Man Syndrome
A yes man is someone who always says yes to everything that the boss says no matter if it’s wrong or not. You don’t want your CPA to have “yes man syndrome” because they’ll lie to you about your finances and may cause you to fall deeper into a financial hole.
Negativity
When you hire a CPA you probably already know that your finances are not in the place they should be in; however, the last thing you need to hear is someone else being negative about your business. Hiring a negative CPA could not only destroy the culture of your company, it could also negatively impact the company’s financial future.
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How to Know Whether You Need an Accountant to Help with Your Taxes
Personal Finance
According to the IRS, over 50 percent of taxpayers hire someone to prepare their taxes. While many Americans do so in fear of making a mistake when filing, there are quite a few people who don’t need a pro at all. The IRS suggests that the only people who need an accountant to help with filing taxes are individuals who have complicated financial lives.
Here are just a few ways to know if you need to hire an accountant to do your taxes:
Self-Employed
If you are self-employed, you may want to hire someone who is familiar with Schedule C. You may also want someone who can help advise you on when you should file a 1099 form or when you should report payments you’ve made to others.
Investors
Those who have several investments in different areas should consider hiring a CPA. Many investment activities can benefit greatly from having a little guidance from a CPA
Identity Theft Victims
Have you been a victim of identity theft recently? You may want to hire a professional. This could be because you want to make sure that you’ve done everything that is required of you as a victim in order to protect yourself.
Alternative Minimum Tax
If you are one of millions of Americans who may be subject to the Alternative Minimum tax, an accountant may be able to help you avoid taking such a huge hit during tax season.
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Six Little Known Facts about CPAs
Accounting
When most people think about CPAs, they think of math whizzes, and of brainiacs who are in charge of how their companies spend money. While in some cases CPAs may be math whizzes or brainiacs, there’s actually more to them than what meets the eye.
Here are six little known facts about CPAs:
No Four Year Degree Necessary
Despite common misconceptions, you don’t have to have a 4-year degree to be a CPA. In fact, a 2-year degree will suffice just fine. An online course will also suffice just as long as you learn the material necessary to take the CPA exam.
CPAs are in High Demand
In the United States, CPAs are generally in high demand, and more demand often means more competition. While a 4-year degree doesn’t guarantee you will win the job, you do want to make sure you are doing everything possible to stand above all of the other competition.
CPAs Can Help You Fire Bad Employees
A good CPA knows how to work not only with your finances but also with other relevant business issues. They’re able to look at data and determine not only what’s costing you money but whose job is costing you money. This could easily turn into a recommendation from your CPA to let certain employees go if it’s discovered that their jobs have become bad company investments.
Most Accountants Love Their Jobs
According to a survey of thousands of CPAs from across the United States, it was determined that most CPAs love their jobs. In fact, 7 out of 10 stated that if they could do it all over again they would still choose accounting as their career.
Accountants Play a Huge Role at the Academy Awards
During the Academy Awards many people spend hours gushing over their favorite actors and actresses when people should really be gushing over the accountants. Prior to the show, accountants hired by the Academy literally go and count every single ballot by hand.
Accounting Jobs Pay Extremely Well
This may or may not be surprising to many, but accounting jobs pay extremely well. The increased demand for new hires actually makes accounting jobs even more lucrative.
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Work from Home? Here’s How It Can Help You during Tax Season
Home Office
Employees who work from home are increasing in number like never before. Currently, employees who work from home constitute a sizable piece of the workforce. In many cases, these employees may be eligible for tax deductions that are unavailable to in-office employees. If you’re not sure how to claim these deductions, you want to first check with the IRS to make sure you meet the criteria because falsely utilizing these deductions could cost you substantial penalties later.
Home Office Deduction
If you use your home office regularly for business purposes, you should be able to deduct a portion of your home-related expenses, such as mortgage interest, property tax and some utilities.
Keep track of mileage and travel expenses
Do you use your personal vehicle for business travel? Do you pay for meals and hotels out of your own pocket? This might allow you to qualify for a tax deduction. If your employer reimburses you, you can’t deduct it; however, if they don’t reimburse you, deduct away.
Keep thorough records and save receipts
If you want to ensure that you are keeping accurate records of expenses, be sure to spend extra effort keeping records and save receipts. The IRS recommends that you write your expenses down or get a log book that will help you keep track just in case anyone asks questions later about your deductions. Records kept on your computer will satisfy this requirement.
Self-employed individuals and independent contractors
While people who are self-employed or independent contractors are not technically employees, you may still be eligible for the same deductions.
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Pay Now or Pay Later: Five Tax Questions You Should Ask Yourself When Starting A New Job
New Job
Starting a new job can be just as exciting to adults as the first day of school is to children. It is an opportunity to begin something new and it is also the opportunity to start fresh in your career. But while starting a new job can be super exciting, it can also be super overwhelming, especially when it comes to filing out tax forms.
Most employers require that their employees fill out tax forms prior to starting a job. Doing so not only verifies your identity but also ensures you are legally allowed to work in the country. After completing these forms, your wages will be taxed by your employer in the manner which is proper according to your marital status, earnings and so forth.
As you mull over the complexities of your new job, it is important to remember that obtaining new employment can oftentimes give rise to all sorts of new tax issues. Here are five tax-related questions you should be sure to ask yourself when you begin a new job.
How do allowances affect my paycheck?
If you claim more allowances, you will have less income tax withheld from your pay. Fewer allowances also mean more income tax is withheld from your pay.
How much will one additional allowance change my take-home pay?
One of the most efficient ways to display how an additional allowance will impact your take home pay is by using the form W-4 Withholding
Should I file married but withhold as single?
When you select the “married” box you generally will have less tax withheld. The primary reason for this is because the withholding formula assumes that during tax season you will file jointly with a spouse who doesn’t work.
If your spouse has a high income, you may want to consider checking “married but withhold as single” to ensure a significant amount of taxes is being withheld.
Is it better to have more withheld just to play it safe?
While choosing to have too much tax withheld may feel safe there is nothing safe about allowing the IRS to hold an unnecessary amount of money. If you really want to play it safe simply do your tax form the right way.
Is a withholding allowance the same as a dependency exemption?
Not quite. A withholding allowance is not the exact same thing as a dependency exemption. The size of your withholding allowance is in part based on your dependency exemption.
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Insurance Claims and Tax Deductions: A Primer
Insurance & Tax Deductions
Beyond the stress (and potential trauma) of an incident that leads to filing a property damage claim, no one likes to deal with the stress of dealing with insurance. Although we cannot help with the insurance end of things, we’ve put together this 101 on how to deal with casualties on your tax return. For starters you must first prove to the IRS that you are in fact the owner of the property. Also, you must notify the IRS of any insurance reimbursement you anticipate receiving with respect to your claim or monetary settlement from a pending lawsuit. Since the deduction only covers unrecoverable losses, you must deduct the aforementioned amount(s) from your tax deduction.
Actual loss
Generally speaking, the tax basis is equal to the amount you originally paid for the property. However the IRS will require you to use the smallest of the property’s tax basis to determine the deductible amount.
Deductible loss
After determining the actual loss, reduce that by $100. Note that the reduction is applied to each distinct casualty event, not each individual piece of property. After that, the total casualty loss for the year should be reduced by an amount equal to 10% of your adjusted gross income. The total is the amount you are able to claim on your tax return.
Tax time: what now?
There are two options: if your causality is the result of a federally declared disaster, you can use IRS form 4684 to claim your losses; if your loss was not in a federally declared disaster zone, you must be eligible to itemize your deductions. If your expenses exceed the standard deduction amount, you will augment your tax return with a Schedule A attachment.
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