When you think of accountants and accounting services, there is a pretty good chance you picture someone in a suit with thick glasses and a calculator, crunching numbers and writing checks. While that is a bit of a stereotype, accountants do provide billing and payment services and help you keep track of your business accounts. However, they do a lot more than just crunch numbers and write checks. In fact, as both an individual and as a new small business owner, you may find the following accounting services quite helpful.
Choosing a Small Business Type
Most people who want to start a small business just jump in without a second thought to what type of business they are owning and operating. This is especially true of small business owners who operate out of their homes or who are the only ones owning, operating, and managing the day-to-day affairs of said business. Since the type of business you own and operate effects your tax filing, you must choose how to categorize your business. Talking to an accountant will help you choose what type of business you own and how to proceed in regards to your taxes.
Taxes: Keeping Business and Personal Separate
One of the biggest mistakes new small business owners make is combining their business with their personal taxes. If your primary income is from your business, but you are married and your spouse also has a job, filing business and personal taxes together can make it seem as though you are quite wealthy personally, or that you are doing exceedingly well with your business. In both instances, you end up paying more taxes!
Your accountant can help you keep both your personal taxes and your business taxes separate so that the IRS can see that you and your spouse are different entities from your business. This also reduces the possibility of an audit. An audit would occur if your business and personal taxes are combined and red flagged by the IRS. As a new business, you would not have ten years' worth of back business taxes to show that you are not embezzling from your own company. Hence, keeping the two kinds of taxes separate is important to your financial well-being, and an accountant can manage both kinds of taxes and tax filings for you.
If You Do Face an Audit
If you do face an audit, you can relax. Your accountant is the one that kept track of everything, not you, which means that your accountant has all of the necessary proof to show the tax auditor. An accountant is essentially your personal insurance policy against audit penalties. This is the biggest reason why so many individuals as well as small and big businesses hire an accountant to manage their many accounting affairs.
Organizing Business Affairs for Future Expansion
If you intend to keep going with your own small business, your accountant can help you plan for your company's future growth. This includes preparation of quarterly reports to project and predict success, re-categorizing your business when you have expanded and you are thinking about incorporation, and ultimately the selling of your business for retirement or passing the business on to heirs, depending on your situation. Of course, that is a long way off, but as your accountant will show you, you have to plan ahead and accomplish a set of goals for each quarter if you expect to reach the big payout at the end or pass on the business. In this capacity, your accountant becomes your business's financial adviser as well as its business accounts monitor and adjuster.Share
20 June 2018
I have always dreamed of opening my own beauty salon, but never seemed to have the money to make that dream come true. I decided that it was time for me to hire an accountant to help me create a savings plan and to assist me in calculating how much money I would need to open my salon. I found out all about what it takes to start a business and a lot of great advice about what I can do to save the money I need to make it happen. If owning your own business is something you are dreaming of, my blog can help.