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Alyson Kilday My partner and I have just opened up our own design agency. Though our new site is just going live as I type this we have had pretty good word of mouth and have kept busy. When we got our LLC we actually bartered with the lawyer in exchange for design work for his website, which saved us a bundle. Now the question I would like to post here is when and if a professional accountant is needed. And what should we look for?

99 weeks ago from Entrepreneurs

Jesse Stay: A professional accountant will probably tell you that you need one, but that's because they want your business. Coming from a family of ...MoreA professional accountant will probably tell you that you need one, but that's because they want your business. Coming from a family of professional accountants, I've been advised from someone not looking for my business that until you're large enough, something like Quicken Home and Business ought to be sufficient. Use TurboTax for taxes. Then, rely on good advisors and mentors for any questions you have along the way. Then, if you still can't get the answers you need, pay for an hour or two of an accountant's time to get their advice. Until you're so big, accountants aren't always necessary. Once you're much bigger though, I strongly advise one - they will save you a ton of money in helping you make proper decisions as to what will save you on Taxes, how to structure your business so that this is possible, etc.
99 weeks ago
Jesse Stay: Also, keep in mind there's a difference between a book-keeper type accountant and a Tax accountant. If all you need is books, just use Quicken ...MoreAlso, keep in mind there's a difference between a book-keeper type accountant and a Tax accountant. If all you need is books, just use Quicken Home and Business until you're large enough to need a more robust solution like QuickBooks. If you need Tax advice, a CPA may be beneficial, but make sure you need it.
99 weeks ago
Alyson Kilday: Thank you for your input Jesse! It's nice to hear from someone who's not trying to get our business, as you noted most of our business related ...MoreThank you for your input Jesse! It's nice to hear from someone who's not trying to get our business, as you noted most of our business related people (lawyer, banker, ect) have recommended their friends. I will look into the software as we are not close to being considered "big" by any means yet. Cheers.
99 weeks ago
Mehul Kar: I'd like to hear some answers to this too. I'm an accounting major, but am interested in entrepreneurship. How much of my own accounts will I be ...MoreI'd like to hear some answers to this too. I'm an accounting major, but am interested in entrepreneurship. How much of my own accounts will I be able to handle, if I don't finish the major. I'm about half way through.
99 weeks ago
Jeffrey Hulten: The way I would approach it is to get a CPA to help you set up your system and do your taxes the first couple of years. Then switch to a tax ...MoreThe way I would approach it is to get a CPA to help you set up your system and do your taxes the first couple of years. Then switch to a tax preparer if your books are not particularly difficult. The reason to start (if you can afford it) with a CPA at least as an advisor is because there are a lot of things that you probably won't think of. For instance, did you record the work you received from the attorney as barter income? In many jurisdictions it is taxable, but 'the man' won't know about it unless you get audited.
99 weeks ago
Lindsey Donner: I agree with Jeffrey, actually; that's what my partner and I are doing for our business, which is also set up as an LLC and is also a creative ...MoreI agree with Jeffrey, actually; that's what my partner and I are doing for our business, which is also set up as an LLC and is also a creative design/writing firm. I elected to use a CPA for several reasons (and with several criteria). Let me try to elucidate quickly, because I don't think a CPA is for EVERYONE:

(1) I moved around a lot. My LLC was incorporated in a state other than the one in which I primarily lived. I needed a CPA who could handle that issue personally and professionally.
(2) I chose to be taxed as an S-corp and to domesticate my foreign LLC. This meant a pile of paperwork I was not prepared to do alone.
(3) I have no accounting experience and wanted to ensure that I did not make a costly mistake in my first 1-2 years of business.
(4) I wanted to make sure I was getting all my startup deductions I possibly could in the first year.

My CPA has generously reduced all costs for me; he only charges me what the check itself costs, for example, when I issue payroll, and does not assess monthly fees, in the interest of gaining a lifelong client - instead of sinking a tiny startup. It helps that he has just started his own practice and has a spirit of entrepreneurship.

If you want a good CPA to assist you, explain to them outright that you are a small business owner with little cash flow. Say, "What can you do for me in the way of bulk discounts and startup costs?" Most CPAs will permit you to "interview" them for free (without exchanging billable data) before you become their client. My advice? Interview many, ask for personal recommendations, and size them up based n your needs - and whether you will feel comfortable calling them in a financial pickle or not.

And above all else, ensure that they will root for you, not put you out of business. Some CPAs do not work well with our situation; that's OK! It's simply not their area! Just find the one who does!
99 weeks ago
Mehul Kar: Great advice Lindsey. That made a lot of things really clear for me
99 weeks ago
Ben Lopatin: Just going to chime in and agree with Jeffrey's advice.

We have professional accountants prepare our LLC's taxes. You should not be using a CPA ...MoreJust going to chime in and agree with Jeffrey's advice.

We have professional accountants prepare our LLC's taxes. You should not be using a CPA to manage your small business's books. In fact, you might not even need to have a CPA set up your books. A short session discussing how you're running your business should suffice. Our accountants did that as a matter of client-building before we even hired them. In fact they suggested that setting up the books would be an unnecessary cost for us, and that they usually only did that for technophobic professionals (or larger businesses).
99 weeks ago
Lindsey Donner: @ Ben - I agree with you. Not sure if I made that clear in my own response, but no, you don't need a CPA to set up your books - mine didn't - ...More@ Ben - I agree with you. Not sure if I made that clear in my own response, but no, you don't need a CPA to set up your books - mine didn't - instead, he reviews my books quarterly to assist with estimated taxes and spot any inconsistencies. (This is a service I elected being accounting-phobic.) Ultimately I do my own after-the-fact accounting using an online service I am fond of. I am curious, however, why you suggest that no small business should use a CPA to manage your books. To clarify, mine issues payroll, prepares taxes, and provides that quarterly review for me because I feel I need it in these first critical years; but I know he has many small clients whose books he completely handles. My father, who runs a successful S-corp, has a CPA do the same for him and then some. Is the distinction about hiring someone to do accounting stand up? Because in that case I agree - if someone says they "need" to do stand up for you, and require you to pay for it, you are working with the wrong folks. My accountant tells me up front, "I do this for people (stand up/IRS paperwork/etc), but it costs XX and I don't advise you do it because you don't need to spend that money on me."
99 weeks ago
Alyson Kilday: Thanks for all the input! We were teetering back and forth on the issue but I think we will come up with a hybrid solution. Though I have some ...MoreThanks for all the input! We were teetering back and forth on the issue but I think we will come up with a hybrid solution. Though I have some accounting classes under my belt I am by nature accounting-phoebic like Lindsey so finding someone that we can trust and ask questions will be a high priority.
We would also like someone to help ensure we got all the possible deductions we can get, I think we at least need another computer and business phone around here! Thanks for all the input again, it's made us feel so much better to get some outside input and opinions to mull over. Cheers! P.S. Which software would you recommend??
99 weeks ago
Ben Lopatin: I'd recommend QuickBooks. It's industry standard (for accountants working with small businesses) and after you get over the initial learning curve ...MoreI'd recommend QuickBooks. It's industry standard (for accountants working with small businesses) and after you get over the initial learning curve its pretty easy to set up and work with. I wish I could recommend one of the newer online services like FreshBooks or Less Accounting, but they're best suited to tracking expenses and invoices. Last I checked they don't support capital accounts (and some other important accounting items), which you'll absolutely need.
99 weeks ago
Jeffrey Hulten: I recently found and have been impressed with MoreI recently found and have been impressed with http://www.freeagentcentral.com/ They support capital accounts, retained earnings, etc.
99 weeks ago
Jeffrey Hulten: > I am by nature accounting-phoebic

Why do you feel this way? I think one of the biggest mistakes small business people make is not paying ...More> I am by nature accounting-phoebic

Why do you feel this way? I think one of the biggest mistakes small business people make is not paying enough attention to the money because its scary or makes them feel powerless or some such.

BTW: Just found that if anyone is interested in FreeAgent and uses my referral code we both get 10% off: http://www.freeagentcentral.com/?referrer=350jdl1m
99 weeks ago
Alyson Kilday: Though I am actually a pretty good "money person", when it comes to taxes I am just not as comfortable. I think it has to do with being afraid of ...MoreThough I am actually a pretty good "money person", when it comes to taxes I am just not as comfortable. I think it has to do with being afraid of messing up or missing something. Or it could just be that accounting teacher that used to sit on the top of his desk with his feet propped on the student's desk, at about 8am (dawn for college kids) and try to make accounting cool with his pants hiked up and white knee socks in your face. Which always ends up making things awkward and definitely NOT cool ;) I will look at Freeagent but I am leaning towards Quickbooks right now
99 weeks ago
Lindsey Donner: Hi again Alyson, the big plus with Quickbooks is almost any accountant or tax preparer can assist you with it if need be. They'll be able to ...MoreHi again Alyson, the big plus with Quickbooks is almost any accountant or tax preparer can assist you with it if need be. They'll be able to reconcile your books come tax time because most are qualified QB consultants. I myself chose not to use it because (a) don't need it and (b) don't like the Mac version; I'm using lessaccounting.com's 30 day trial to see if that suits me better. But in reality, for my LLC, after-the-fact checkbook register style accounting works, too. I wish you luck in your venture; and I completely understand your feelings about accounting - because I share them. Don't let it get you down. Be excited for yourself and your business!
99 weeks ago
elizabeth: How exactly do you do word of mouth? I am aware that it is self explanatory for the most part. I am just wondering if their are any tricks that ...MoreHow exactly do you do word of mouth? I am aware that it is self explanatory for the most part. I am just wondering if their are any tricks that the general pubic doesnt know.
99 weeks ago
Alyson Kilday: Well we are in a pretty small town right now. It started by getting on the front page of a local paper when we got back from our 9 month sailing ...MoreWell we are in a pretty small town right now. It started by getting on the front page of a local paper when we got back from our 9 month sailing and backpacking adventure through the Caribbean and Colombia. Next to the story about a lady getting lost in the woods...slow news day! :) Then we did a couple of small projects for people such as baby shower invites, birthday party cards, small stuff but it got sent to 200+ ppl around town. It's a trickle up effect where we are starting to see people now seeking us out for bigger and bigger projects. On the web we have a blog, use twitter heavily, and a facebook fan page where we network with a whole different group of people.
99 weeks ago
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