Starting a business is an exciting and overwhelming experience. With so many things to consider, ensuring you have the right people on your team who can help guide and support you is essential. An accountant is one of those key professionals that can provide invaluable insight into managing your finances and keeping your records up-to-date. But before engaging with an accountant, there are some questions you should ask them first to ensure they’re the right fit for your needs.
Here are 13 essential questions you should be asking when starting a business:
Starting a business can be an exciting and overwhelming experience. Ensuring you have all the information you need to make informed decisions is essential. One of the best resources for this is your accountant. Here are 13 questions to ask your accountant when starting a business:
#1 What Business Structure is Most Appropriate for My Circumstances?
Selecting the ideal business structure for your company is one of the initial steps in establishing a successful enterprise. Although each type of corporate setup has strengths and weaknesses, an accountant can provide invaluable guidance to help you make an informed decision.
Here is an overview of the various business structures available:
- Sole proprietorship: Solely owned and managed by a single individual.
- Partnership: Two or more people come together to own and operate a business.
- Corporation or C Corp: A separate legal entity from its owners.
- S corporation or S Corp: A business entity in which the owner assumes all responsibilities and enjoys all profits without being subject to corporate tax rates.
- Limited liability company (LLC): Combines a corporation and partnership’s advantages.
Regarding taxes and legal liability, each business structure carries its regulations. An accountant can provide a comprehensive review of the available structures so you can determine which one is ideal for your company. Furthermore, your accountant will guide you through filing all necessary documents according to the chosen legal structure.
#2 How Does the Legal Structure of my Business Affect My Taxes?
Choosing the right business entity for your venture can have significant tax implications. Depending on the type of business structure you choose, there may be different tax filing and reporting requirements to consider when running your business.
For example, with a Corporation, you may be subject to double taxation; income received by the business is taxed at the corporate level, and any profits distributed to shareholders will also be taxed at an individual level.
On the other hand, a Limited Liability Company (LLC) offers pass-through taxation, meaning that taxes are assessed only once on profits/losses of the LLC distributed as taxable income to its members. Therefore, it’s essential to consider all available options to determine which legal structure may result in the lowest overall tax burden for your venture.
#3 What Kind of Financial Records Should I Keep?
Tracking your business records is necessary for completing taxes, calculating profitability, and securing funds. Not to mention it’s also essential in the event of an audit – you will always want those documents on hand. But, again, an accountant can guide you through which types of files are necessary for your business operations.
To ensure that all essential documents are kept secure and accessible, consult your accountant about which records should be stored. Common items to file away include:
- Balance sheets
- Bank statements
- Business agreements (e.g., operating agreements)
- Business licenses and permits
- Business tax returns
- Cash flow statements
- Check registers
- Credit card statements
- Financial statements
- General ledger
- Income statements
- Insurance documents
- Payroll records
- Statement of retained earnings
When deciding how long to keep records, pay attention to the regulations of the IRS and FLSA. In addition, consulting with an accountant is recommended to ensure you comply with all necessary time frames for each record type.
#4 What are My Tax Obligations?
You may have different tax obligations depending on your company’s size, industry, and location. Generally speaking, most businesses need to pay income tax, payroll tax, and (if applicable) sales or value-added tax in their jurisdiction. Additionally, depending on the type of business entity you have chosen, there may be other local or federal taxes to consider, such as self-employment taxes for sole proprietorships or corporate income taxes for corporations. It’s essential to understand your potential tax liabilities to ensure you comply with all relevant regulations.
#5 How Do I know if my business is doing well financially?
Keeping track of financial performance indicators like gross revenue and net profit can help you assess your business’s overall health financially. Additionally, other measures such as cash flow and customer retention can also be useful in monitoring your company’s financial well-being. This analysis, combined with a review of critical business decisions and strategies, will give you insight into possible areas for improvement that can ultimately lead to increased profitability.
#6 How Should I Get Ready for Tax Season?
A qualified accountant can handle all the tedious paperwork and remit your business taxes to the government. No more worrying about filing those complex accounting forms or fretting over tax liabilities – an accountant will ensure that everything is taken care of for you so you can focus on running your business!
Tax season doesn’t have to be overwhelming for you and your accountant. To simplify it, ask your accountant what information is needed from you in advance and how best to organize records (for example, with accounting software). The more organized the data is when submitted, the less time will be spent preparing everything on their end – saving us a lot of stress!
#7 What Business-related Expenditure Can I Deduct?
With the right expenses and business model, you may be able to reduce your tax bill by leveraging various eligible deductions. Here are a few of them for your consideration:
- Business travel
- Business use of car
- Charitable contributions
- Employee expenses
- Home office
When claiming tax deductions as a small business owner, caution is key. Ensure you adhere to all rules and regulations of each type of deduction available to maximize the savings!
Don’t forget to consult your accountant about which business tax deductions you could be eligible for. Your accountant can provide invaluable guidance on leveraging these available deductions and getting the most out of them.
#8 How Can I Manage My Cash Flow Better?
Developing a cash flow budget is one way to help plan for expected expenses ahead of time and ensure there’s enough money available when needed so that your business can stay afloat during unexpected expenses or slower sales periods. Additionally, setting up systems that allow customers to pay quickly upon receipt of invoices will make it easier to track payments due and ensure you receive payment in a timely manner so that cash flow remains consistent throughout the year.
#9 When Should I Settle My Estimated Taxes?
As a business proprietor, you may be obligated to submit estimated tax payments. This is an approach used by individuals to pay taxes on income not subject to withholding taxes. Simply put, if your income doesn’t have any taxes deducted from it, then you’ll need to make estimated tax payments.
If your income doesn’t have taxes automatically withheld, you might need to make estimated tax payments. This includes:
- Gains from sales of stock
- Interest income
- Self-employment income
If you’re concerned about quarterly tax payments, chat with your accountant— they can file and pay estimated taxes on your behalf.
#10 What is My Break-even Point?
You’ve reached your break-even point when the total revenue and expenses are balanced. This is a pivotal milestone in any business since you have finally reached profitability, as all costs incurred now have been covered.
Achieving your break-even point is vital for pricing products and services. It can assist you with crafting a budget, controlling costs, and establishing an effective pricing strategy that sets you apart from the competition.
With your financial records in hand, your accountant can accurately calculate the break-even point of your business. Once you understand this benchmark number, you can assess whether or not your company is profiting and how close it may be to monetary equilibrium.
#11 What Steps Can You Take To Help Me Grow My Business?
Your business aims to grow, whether expanding to another location or offering extra services. Speak with your accountant and learn how they can assist you in achieving growth for your organization.
Accountants are invaluable when it comes to managing your finances and taxes. They can provide tailored advice that will help you grow and keep an eye on any potential issues that might be preventing further progress (for example, excess spending). Moreover, they’ll also make sure you’re always staying ahead of the game by predicting necessary future expenses and opportunities.
#12 Are the People I Have Hired To Work for Me Considered Employees or Independent Contractors?
As an employer, you are responsible for accurately classifying your employees. Are they full-time employees or independent contractors? This misclassification could result in costly tax penalties and complications if not appropriately classified. Thankfully, consulting with a qualified accountant can help prevent worker classification issues from arising and aid you on your journey to success.
There are significant distinctions between W-2 employees and independent contractors. For example, as an employer, you must withhold and remit payroll taxes for an employee; however, no such obligation exists with a contractor—the responsibility is solely upon them to pay any relevant taxes.
Your accountant can be a great asset in distinguishing between employees and independent contractors, helping you to navigate complicated regulations and ensure compliance.
#13 What are the Available Financing Options I Can Take?
Speaking to an accountant is always a good idea whenever you have queries about your business’s tax obligations. However, you must ask this question during the initial stages of forming your company.
Extra funding may be needed to expand your business to execute large-scale projects. Your accountant can guide you in selecting the optimal small business financing option that is right for you and your company.
Some notable funding options to consider include:
- Business credit cards
Your accountant can educate you on the differences between your options, provide insight into their benefits and drawbacks, and support you in getting a loan. Furthermore, they may be able to point you toward potential lenders that they are familiar with.
Is Tax Accounting and Invoicing Software Necessary?
Yes, tax accounting and invoicing software can be necessary for your business. Integrating the correct accounting and invoicing software into your business is essential, regardless of size or industry. The right system will streamline and optimize all finance-related processes and help with tax compliance.
Your accountant can assist you in selecting the best solution for your unique needs—one that provides comprehensive features, such as invoice tracking, payment processing, and bookkeeping. At the same time, the software must be user-friendly and secure.
Why Choose ReliaBills?
If you’re planning to start a business, it’s essential to ensure that you have a solid invoicing and payment processing system for managing and receiving payments from your customers. ReliaBills is one of the best solutions available on the market and one that can help you get started quickly and easily.
ReliaBills is a cloud-based invoicing and billing software designed to automate payment processes, reduce administrative overhead, and streamline payment processing duties. ReliaBills’ payment processing features include automated recurring billing, payment tracking, payment reminders, online payment processing, and much more!
ReliaBills also provides valuable tools that help manage customer information, monitor payment records, and create proper billing and collection reports. As a result, invoice and billing management are simple and convenient. You also get access to active customer support, ready to assist you whenever you need help.
Get started with ReliaBills for free today! And if you want more features, you can upgrade your account to ReliaBills PLUS for only $24.95 monthly! Subscribing to ReliaBills PLUS will give you access to advanced features such as automatic payment recovery, SMS notifications, custom invoice creation, advanced reporting, and more!
With ReliaBills, you have an all-in-one solution to your invoicing and payment processing needs. Our convenient solutions will enable you to focus more on running and growing your business. Get started today! Visit www.reliabills.com to learn more.
If you’re starting a business, make sure to consult with an accountant. The questions in this article are a great place to start your conversation and ensure you receive the best advice for your unique situation. Additionally, consider tax accounting and invoicing software when seeking financing solutions to help streamline the accounting and invoicing process.