IRS Tax Tips for Starting a Business

By Debby Winters

 

I frequently have clients who are starting a new business ask about their taxes.  While I can help clients determine the business structure best for the type of business they start, help them obtain their Employer Identification Number, and answer questions about health care for their employees, I recommend they talk to an accountant when they need advice on taxes and accounting methods.  When I came across a list of tips from the IRS, I thought sharing this list and the advice the IRS gives might help with having a place to start.  The IRS tips can be found at this link and it cover 5 basic subjects.

  • Business Structure.
  • Business Taxes.
  • Employer Identification Number.
  • Accounting Method.
  • Employee Health Care.

Your accountant or your business attorney can help answer questions that you have on these topics, but the IRS is a good source too. You might want to check out the tips the IRS gives as a starting point. Once you have some basic information, you should consult with your business attorney or accountant.

Good luck!

Accountant for your Business

By Debby Winters

As tax time has approached us, my clients have asked me to recommend a business accountant for them. I always give out a list with more than one accountant on it as each business has different needs.  In writing this blog on things to look for in a business accountant, I should say that while there are many aspects of your business that you can handle on your own, accounting is one worth turning over to a professional. Accounting goes far beyond simply sending invoices and tracking expenses; a good accountant can and should also help you with your taxes, as well as find ways to keep cash flowing.

What are your needs and who can meet them?

In addition to accountants, there are also bookkeepers and Certified Public Accountants that provide slightly different services from one another. A bookkeeper will set up your accounting software and enter receipts and invoices into the system weekly or monthly. A bookkeeper can also handle payroll data and quarterly taxes, as well as create monthly financial statements like balance sheets and cash flow statements. If your needs are simple and you don’t need help preparing your tax return, a bookkeeper may fit the bill.

An accountant, on the other hand, takes on more of the day-to-day bookkeeping needs of your company. An accountant can do everything that a bookkeeper can, with the addition of being able to prepare business taxes. Accountants are typically trained to interpret and analyze financial data, and you’ll pay more for the privilege.

And finally, a Certified Public Accountant (CPA) is an accountant who has passed a rigorous state exam. They’re the only one of the bunch that can certify an audit. They also provide tax planning, and are highly qualified experts. Naturally, they’re the most expensive option.

Ideally, the accountant or bookkeeper you end up working with will have experience with both small businesses and your industry. If you are unfamiliar with accounting terms like depreciation, chart of accounts, and cost of goods sold, you’ll want an accountant who will be patient at explaining it all to you. Remember: even if you hand your finances over to a professional, you still need to understand them. A good accounting partner will be communicative about the process, and will be willing to teach you.

You can hire an individual that works for several companies as a consultant, a smaller accounting firm, or a larger practice. One of the first two options, the individual or small firm usually offer more affordable service that tend to be more one-on-one, so you might want to start there. Keep in mind your needs include your budget so if you are trying to stay lean, hire the less expensive option.

Questions to ask before hiring

Some of the questions you should ask each provider or firm include:

  • What accounting software do you use?
  • Do you provide software setup?
  • Do you provide monthly bookkeeping?
  • What is your hourly rate?
  • Can you provide three small business references?
  • Do you work onsite at the client location?
  • What industries do you specialize in?
  • Do you also prepare business taxes?

You want to find an accountant who you can trust with your finances, and who will be with you for years to come. Don’t overlook how important the selection process is, and spend enough time on it to find the best fit for your company. Good luck finding the right person to meet the needs of your business!