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Is an accountant really necessary?

chuckransomchuckransom Posts: 1subscriber



Hello forum,






 






I am a new member as well as a new “official” small business owner. For the past 5 years I have been a club promoter for several night clubs in my area. Generally I am paid in cash by the club owners or as a part of my take of the entrance fee of any club I promote. Recently I tried to purchase my first home but was denied not because of my credit score which is good, but because of lack of proof of income. Since then, I have incorporated my business in an effort to have more official record keeping about my income.






 






My question is: Is an accountant really necessary in the beginning? I don’t think my needs are complex but I tend to deal in a lot of cash and need help to make my business income seem as legitimate as possible to banks and the IRS. I have a guy who does my yearly taxes but my question is do I need a consultant type of accountant and not just a tax guy?  Any thoughts?


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Comments

  • PiperTaxPiperTax Posts: 5subscriber
    Many, many business owners do their own bookkeeping. The math involved is rarely complicated, and a basic-level of accounting is certainly something you could learn to do on your own if you wanted to take the time to read an "Accounting/QuickBooks for Dummies" type of book.
    It`s really a question of

    Do you want to do the work? and
    Would it be more efficient for you to contract it out? (ie, in the time you would save by getting help with it would you be able to earn more than enough money to pay for the accountant`s hours?)
  • CookieMonsterCookieMonster Posts: 0subscriber
    If the business is simple - money in, expenses out - then most of your accounting needs can be managed by keeping your checkbook balanced, keeping invoices, and keeping receipts. That`s all you should need.
  • glgcpaglgcpa Posts: 0subscriber

    Hello forum, I am a new member as well as a new “official” small business owner. For the past 5 years I have been a club promoter for several night clubs in my area. Generally I am paid in cash by the club owners or as a part of my take of the entrance fee of any club I promote. Recently I tried to purchase my first home but was denied not because of my credit score which is good, but because of lack of proof of income. Since then, I have incorporated my business in an effort to have more official record keeping about my income. My question is: Is an accountant really necessary in the beginning? I don’t think my needs are complex but I tend to deal in a lot of cash and need help to make my business income seem as legitimate as possible to banks and the IRS. I have a guy who does my yearly taxes but my question is do I need a consultant type of accountant and not just a tax guy?  Any thoughts?

    Several thoughts:If you have been a small business owner for 5 years then you should have "proof of income".  Assuming you operated as a sole proprietor a bank requests a personal financial statement and the last 3 years of tax returns, which would correspond to your reported income on your tax return.  You can do this yourself, but accountant`s do it regularly so it`s usually a lot easier for them to assemble this in a format that is pleasing to a bank.You said you just "incorporated".  If this is the case then there is much more of a need for a balance sheet as well as an income statement, even if you do not have the assets and/or income that requires reporting this information to the IRS, they do expect that you have it.  Again, you can produce this information yourself, but if you`re looking for a bank loan or if you have any "issues" with the IRS you may prefer to have an accountant help you because they know what these people are looking for which is often different than what the basic reports that QuickBooks (or other out of the box software products) can produce.  These software products are great for internal management purposes and routine tax returns, anything else you may wish to hire a professional.It shouldn`t matter that you are a cash intensive business.
  • kjlltdkjlltd Posts: 1subscriber
    Chuck,
    I see some potential red flags in what you have said. For one thing if you have been reporting your income on your tax return that should be proof of your income, if not I would recommend amending those returns.
    Another point is that I read that the IRS is targeting sole proprietors for audits, especially consultants and construction people. That means any return for the past three years not the present year.
    Also if you have incorporated you will need to treat yourself as an employee and pay yourself as such. This means payroll reporting which is more involved that what most people think. Payroll reporting is monitored MUCH more than income taxes and the penalties are steep. This is where the IRS catches a lot of the tax evaders. I have seen some big problems from people that were lax on payroll reporting. One company, which I did not want to touch as a client, had liens on their homes and were in a position to lose there homes if they did not get things taken care of. If you are not familiar with payroll reporting hire someone to do this for you. You will save money and aggrevation in the long run.
     
    Kathy Lauwagie CPA MBA
    kjlltd11/14/2007 10:51 AM
  • jolliveejollivee Posts: 0subscriber
    I guess an accountant is necessary for your business or else the IRS would question your income taxes etc., A bookkeeper is different from an accountant. But I`d rather have an accountant. Mesa Accountant
  • couponclockcouponclock Posts: 0subscriber
    My accountant has saved me SO MUCH money.   In addition, in 15 years I have had many issues with the state and the IRS loosing paperwork, not wanting to return money to me or whatever.   My accountant was always there to take care of the problem and let me go about my own business.  What took her an hour or two to resolve could have taken me many days of trying to figure out what the heck to do.
  • chanjohnchanjohn Posts: 0subscriber Member
    I would highly recommend a good accountant, especially if you can really afford to get one. Besides all the extra time you will have when you don't have to deal with that stuff anymore.
  • smith360smith360 Posts: 1subscriber
    In every business financial and assets must be assure that it growing and accountant play a big role in your business status. Accountants and auditors keep track of a company's money.
  • The-Tax-ManThe-Tax-Man Posts: 0subscriber
    Most taxpayers do not have difficult returns that require the knowledge and expense of a CPA. Most tax returns can be done by an individual experienced accountant at half the worry and half the price. We are proud to offer a relaxed environment in which our clients can be assured that our patient staff will explain as many of the nuances of accounting and tax that the client wishes to learn.
  • jacklinewilsonjacklinewilson Posts: 0subscriber
    This is true that good accountancy really help a businessman to save their time and money. I think so every businessman whether small or big businessman should hire a good accountant.
    Forex | Trade Forex |Forex trading
  • emma123emma123 Posts: 0subscriber
    Hiring a competent accountant and using an effective accounting software can help you to streamline your business operations, maintain your financial statement and save tax.
  • BookerBrinleyBookerBrinley Posts: 0subscriber
    You can use accounting software for managing your accounts. You can also outsource your accounting services. It will save time and money. Thanks!
  • movingsoftwaremovingsoftware Posts: 0subscriber
    Its important to manage accounts for any kind of business to know that whether you are running it in profit or in loss. However, it won't be necessary to hire an accountant, if you are using accounting softwares to manage your business.
  • racks-30racks-30 Posts: 0subscriber
    Good account is not only maintain Financial transaction but also save tax.
  • MicroBiz12MicroBiz12 Posts: 1subscriber
    An accountant may not be necessary in the day to day running of the business. You can do all your bookkeeping and financial decision making. You may be required by law to hire an auditor/accountant to verify the credibility of your financial records.
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