5 Reasons Why You MUST Have an Accountant for Your Business
It can come as a shock to many people trying to start a business that as many as 80% of new businesses fail within the first year and a half. The primary reason for this daunting statistic? Bad financial management. What DOESN’T come as a shock is that most of these failed businesses tried to handle the financial aspects on their own. This is why having a knowledgeable financial advisor on hand as partner and consultant is a key component to starting any business venture, especially for small businesses just getting off the ground. Professional accountants do a lot more than just helping you file your business taxes. Through a comprehensive analysis of your financial situation, cash flow and expenses, an accountant can ensure that you have an accurate forecast for your business so that you can stay prosperous and in the black for the year. Here are five reasons it’s vital to have an experienced, knowledgeable accountant helping you with the success of your business.
Ensuring you are keeping track of any potential deductions is a vital part of filing your business taxes. Many new entrepreneurs leave money on the table by forgetting to account for mileage, out-of-pocket expenses or home office expenditures. A professional accountant will help keep track of those types of potential money-saving deductions throughout the year so that come tax time, you can rest assured that you are doing everything possible to save your business money.
- Real-Time Decisions.
Many small business owners who don’t work with a professional accountant or business advisor find that when it comes to making big financial decisions, – like buying a large piece of equipment or hiring an employee – they are often doing so in a financial vacuum, without full knowledge of what the implications of the expenditure might mean for them down the road. Having a professional advising you on your cash flow and budget can make those decisions much easier, and you’ll be able to make in real-time with full knowledge and confidence.
Yes, the word that strikes fear in the hearts of any entrepreneur: the dreaded audit. One of the biggest mistakes a business owner can make is to only seek the advice of an accountant once they are already in an adverse situation, when they could have potentially avoided the situation by having worked with an accountant throughout the year. There are many reasons why the IRS decided to audit a business, from something as simple as too many mistakes on a tax form to something as complex as too many write-offs. An experienced accountant can protect you from these types of issues, and using their expertise to focus on the finances will free you up to focus on the important things, like running your business!
- Saving Time and Energy.
A common mistake among small business owners is that their razor-thin budget means they can’t afford an accountant. However, if you weigh the amount of time and energy you spend worrying about and dealing with the financial state of your business, you’ll quickly see that the benefits of hiring someone to do that for you far outweigh the cost. A business owner needs to focus on the day-to-day marketing and management of the business itself, and engaging a professional to deal with the finances will allow you to do just that.
- Planning for the Future:
One of the most important benefits of hiring a financial advisor for your business is the ability to plan knowledgeably for the future. A professional can help you look at past performance indicators that can help you plan for the possible seasonality of your business, which in turn can assist you with inventory control, budgeting for when to buy big-ticket items, and figure out the best plan to ensure the longevity of your business.
The life of a new business owner can be exceptionally stressful, but deciding to hire a professional financial consultant to collaborate with you on your venture can take a lot of that stress off your back, and allow to actually enjoy your new entrepreneurial status, and look forward to a future with confidence. <strong>Executive Public Accountants</strong> specializes in partnering with small business owners to ensure the financial health of their business is secure. <strong>Call us today</strong> to see how we can help you and your business breathe a financial sigh of relief!
8 Tax Tips for Small Business Entrepreneurs
Congratulations! Whether you finally decided to stop procrastinating and open that small business you’ve been talking about forever or you’ve been running your own side hustle for a few years, you deserve hearty kudos for taking a risk and living a dream many of us have but few ever do. Being a small business owner has significant rewards, but it also comes with some drawbacks and pitfalls you must be aware of if you’re going to succeed. One of those areas is how to ensure you are maximizing your tax savings with some basic yet important strategy. A recent study published in Forbes Magazine indicated that as much as 93% of small business owners overpaid their taxes annually. (Forbes, April, 2018). Here are some tips we’ve put together for to help you take advantage of tax savings for the small business entrepreneur.
If you own a small business, chances are that you are doing a great deal of the necessary travel yourself. All those rides to the airport or to drop off a package add up. Make sure you are keeping track of any mileage you incur for your business by using mileage tracker, and then remember to provide those to your tax accountant. Even if you’re using your personal vehicle, those miles add up, and could be a hefty deduction when the time comes.
- Home Office.
If you are running your business out of your home in an area of the house that is used only for your business (a dedicated home office), you are eligible for a home office deduction. This cut gives you a $5 deduction per square foot up to 300 feet.
- Going Green.
If you’re implementing sustainability initiatives in your business, you should keep track of what you’re doing and do a little homework on what type of tax credits are available to reward your efforts. For example, if you’re using a hybrid vehicle for your business, you might qualify for the IRS Plug-In Electric Drive Vehicle Credit. Do a little homework on this topic and as your tax accountant for more info.
If you have set up an insurance plan for yourself or your employees, the premiums you pay for this insurance might be tax deductible, as well as other insurance premiums you pay to protect your business. Make sure you factor these in when tax times comes.
- Keep Careful Records & Receipts.
Keeping any receipts related to business – like travel, meals, entertainment, supplies, etc. – is especially important. The IRS allows for 100% of business related travel to be deducted and 50% of meals and entertainment, but due to abuses of this deduction in the past, it’s important to make sure you err on the side of OVER documenting. Your receipts should include all the obvious information (date, time, amount and place of expense) but also note on the receipt who/what the meal was for and the purpose of the expense. For travel expense, make sure you ask the hotel for an itemized bill at checkout. Having all this information ready to go when you meet with your accountant at tax time will make things much easier and faster.
- Save Your Cash.
Many entrepreneurs look at business profits and assume they need to spend their cash to avoid a big tax bill. Don’t fall into the trap of spending a dollar to save fifty cents. If you really NEED a new printer, computer, etc. than buy it, but don’t spend money just because you think it will help you avoid the bill from Uncle Sam. Don’t forget that taxes are the cost of doing business, and if you’re paying them, that means you’re making money, which is why you started out in the first place.
- Save for Retirement.
It may seem like something you can put off, but starting picking the right retirement plan and starting to develop it is something that smart entrepreneurs do. Ask your tax advisor about which plan is right for you. These days, many entrepreneurs are looking at opening an SEP-IRA, thanks to it being cheap to open, and its’ high contribution limit (which is all tax deductible). Ask your advisor about which plan is the right fit for you.
- Invest in Professional Software.
This may seem like a no-brainer, but investing in today’s business software is a terrific way for small business entrepreneurs to avoid headaches and make sure they are on the right track when it comes to tax time. QuickBooks is the leader in this race for a reason. It’s user friendly interface and organizational metaframe are unmatched. If you need some help getting off the ground with it, contact your tax advisor and see if they have a Certified QuickBooks Pro on the team. We do here at EPA!