Top 10 List of Accounting Services to Entrepreneurs
Posted by Pierre de la Fortune on August 04, 2015 @ 12:01 a.m.
Written by CPA MOMS™
1 Keeping the Books & Reporting: data entered, reconciled, and “closing the books” on a monthly basis is an absolute requirement. Generating and providing monthly financial reporting. At a minimum, the monthly reporting package should include a Balance Sheet, P&L by month, P&L by business line, AR Aging, AP Aging, and a Cashflow report. These reports should be delivered to decision makers without having to request these reports within 2 weeks of every month-end. If an entrepreneur’s accountant has not performed any one of those tasks on a consistent monthly basis, there is no need to read further…it is time to find another professional.
2 Managing the daily, weekly or monthly Cashflow (frequency depends on how tight cash is)
3 Knowing who in the company is required to take a Payroll and when, including the business owners in certain corporate types. Knowing the IRS employee versus independent contractor rules and all of the required reporting for each. Knowing the worker’s comp insurance rules regarding payroll. Managing the payroll in-house or outsourcing. If outsourced, should be reporting, verifying and entering all payroll data into the accounting system. Maximizing tax savings strategies, including group health insurance and HSAs, by working with insurance agents and tax preparer.
4 Knowing all of the tax reporting deadlines and rules for sales tax, payroll tax, 1099, business asset/property tax, income tax (including extensions) is a key accounting role. Even if the accountant doesn’t file the returns, the accountant is the one who should be pushing information well in advance of tax deadlines to the tax preparers.
5 Providing tax preparers with quarterly or monthly financial reports to obtain tax liability estimates for the quarter and annualized for the year. The accountant should properly accrue for tax liabilities as they occur and communicate to the business owner, not wait until the end of the year to get the bad news from the tax CPA or in March/April when the taxes are due. Also, accountants should be providing tax saving strategy ideas to the business owner and work directly with the tax cpa to ensure all tax savings strategies have been communicated and considered by the business owner. If you don’t know your estimated tax liability for the year by the end of the first quarter and haven’t looked at your tax savings options at least once a year with your tax cpa, your accountant isn’t doing their job.
6 Know and question the basic legal structures and the tax pros/cons of choosing one entity structure over another. This includes information on all the steps required toform an entity and dissolve an entity. Also, accountants should know when it makes sense to incorporate financially. This information should be used to simplify the company structure, save taxes, ensure legal protections have been created to protect company assets and business owner assets & interests. The accountant isn’t an attorney, but should have ideas of what structures make sense and facilitate those discussions with the attorney and tax cpa for the business owner if the legal structure is unclear to the entrepreneur.
7 Know the legal filing deadlines for all entities, including foreign registrations (i.e. registering entities to do business in another state.) Accountants should either file and pay the annual legal filings or should outsource to a corporate maintenance company for every entity.
8 Always safeguard the company assets. This means making sure that measures to prevent fraud, including from the accountant themselves are in place (accountants don’t sign checks, owners do.) Safeguarding assets ensures that inventory and supplies and checks and equipment is accounted for and measures to prevent theft have been employed. The other aspect of safeguarding assets is managing the insurance and legal structure in cooperation with the business owner, insurance agent, and attorney.
9 Since most entrepreneurs co-mingling some personal activity with their business to take advantage of the tax savings in a corporation, accountants should know how to properly account for those transactions and should know all of the 4 different options entrepreneurs have for getting paid from the company, 3 of the 4 are non-taxable withdrawals to the business owner.
10 Provide timely financial information to assist the business owner with pricing and understanding how much profit is being generated for each major business line or product line, and to assist the business owner in setting budgets and forecasts for the year, including revenue targets, profit targets, ROI and other key financial ratio targets.
This top 10 list is the bare essentials for every entrepreneur. It doesn’t stop there, however, someone who can and does perform all of these functions is what we consider to be an entrepreneur’s CFO.
For more info please visit: http://www.cpa-moms.com/cpa-moms-blog/top10listaccountingservicesforentrepreneurs/
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