Is this your first time starting a business? If so, you probably have a lot of questions about everything. And you might be tempted to contact a firm like ours to help you get answers. For example, a while ago, a person in North Carolina reached out to us. She and her husband were interested in starting a commercial landscaping business. Neither of them had experience owning a business before. So she reached out to us for help starting and running their business “from the ground up.”
While we’re perfect for strategic planning, financial forecasting, vetting the interest in your idea, and writing a business plan, the person contacting us was looking for guidance on setting up the business correctly to avoid financial structural complications down the road.
We recommended she find an experienced accountant located in her area. An accountant like that would know local considerations for service-based businesses as well as the details about how her state and county rules work.
If you’re wondering if contacting an accountant when your business is in startup mode is overkill, here are the reasons we think it makes a lot of sense to begin your business’ foundation by working with an accountant.
Accountants Can Help Startups with These Business Services:
New Business Formation –
- Are you wondering if your business should be an LLC, an S Corp, Sole Proprieter, or something else? Your accountant can analyze the tax advantages, legal exposure, ease of operation, and portability to help you select the best option for your specific scenario.
- Legal structure documentation. Yes. You can fill out your own Articles of Incorporation (Corporation) or Articles of Organization (LLC). Still, if you do, you will have to figure out how to do it, which is a lot of time spent learning how to do something that you’ll only do once. New business is all about momentum; focusing your time on the things you do best that will move your business forward is critical at this stage. Learning how to fill out legal paperwork for many is likely something that will zap you of your energy and momentum.
- Establishing an Employer ID number. Again, another necessary task that will take an accountant a few minutes to do.
- Determine your startup budget and working capital needs. Are you a numbers person who has seen many businesses succeed and fail? Your accountant is. They will help you budget and determine capital needs from a place of knowing what typically works and doesn’t.
- Establish billing and collection procedures. You can Google this and hope you’re reading good advice if you want to do this yourself. Or you can invest in working with an expert in this space and get it right the first time.
- Set up a home office so you can benefit from certain tax advantages. An accountant will know what typically raises red flags with the IRS, and this can help you avoid unnecessary audits.
- Comply with employment laws, so you don’t get fined or have unhappy employees.
- Small Business Accounting – Your accountant can help you decide if you are a candidate for QuickBooks or other accounting software. They can help train you to use it properly. They can help you set up your accounting software for your needs. An accountant can teach you and your staff to do monthly activities like reconciling bank statements. They can also help you determine how much accounting your staff (or you) should be doing, and how much you should have a bookkeeper do. They can connect you with a bookkeeper that understands how your accountant likes things done; this will help save you money when your accountant does your taxes.
- Payroll – Your accountant can help you decide how to do your payroll. In some instances, it might be best for you to do it yourself, or you might decide that you want your accountant to do it for you. Or, depending on your situation, your accountant might recommend a payroll service such as ADP Payroll Services.
- Audits, Reviews, and Compilations – Some companies will be required by lenders or customers to have their books audited by an independent third party. Many accountants will perform audits for their clients. Reviews and Compilations are similar to audits but less expensive, and the requirements are not as strict as an audit.
- Internal Controls – At times, you may need a trained outside professional to evaluate your company’s operations to determine if the appropriate controls are in place to ensure proper handling of resources and to protect yourself and the company from problems such as employee theft.
- Cash Flow Management – Everything is better when your incoming cash exceeds your outgoing cash. A cash crisis can be emotionally devastating, and it can even kill your business. Your accountant can help you understand when, where, and how your cash shortfalls will likely occur and help you determine the best sources for meeting your additional cash needs.
Accountants Can Help Startups with These Tax Services:
- Tax Preparation – Tax preparation will include preparation of federal and state income tax returns, as well as sales tax returns for companies that sell products at retail, like a restaurant or a hardware store. A special note: if you are in the construction business where you sell labor and material, or if you are an e-commerce company, sales tax issues can be very complicated, which is an even bigger reason to employ the services of an accountant from the beginning.
- Tax Planning – Tax planning is the key to successfully and legally reducing your tax liability. A good accountant will proactively recommend tax saving strategies to maximize your income and the value of your business.
- Resolving Tax Problems – Almost every business owner has a tax problem that will require the help of an accountant eventually. Examples include representation at IRS audits, payroll tax problems, and IRS payment plans.
If you are not sure where to start to find an accountant, there are many resources to try. Begin by asking those you know who own businesses. Most work with or know of an accountant that has a long-standing positive reputation. Next, try Yelp for local accountants. Lastly, there are online directories, such as GoodAccountants.com.
Starting and managing a successful small business is bone-crushing hard work; ask anyone you know who does it. Simply writing a great business plan isn’t enough. That’s why you need the services of a trusted advisor, your accountant, who can help you make informed business and financial decisions.