The other post about the business start up and the accountant debate got me thinking….do you reallly need one?
Here are my thoughts and realize I am not making a claim either way, just wondering….
You have Turbo Tax to do your taxes…there is help at the IRS site and forms and publications are readily available…an accountant is going to charge you a pretty penny to do all your stuff yet you are still responsible in the end. Yes, you could go back to them legally I suppose but is that worth it?
I only ask as last year we paid almost $2k to our accountant for all our stuff and I was talking to one of my subs and he said he went one year without one, made a small mistake on his IRS forms and after meeting with the IRS guy, the penalty was only $400. He said he saved $1600 from what I did and he did something wrong!
Now I know that you could easily get yourself in deep s**t if you screw up your books big time but just thinking out loud here.
In these times where we all seem to having to pinch our pennies, is this an area worth looking into or do you just bite the bullet, pay them and move on?
Replies
How much time did your buddy spend doing his taxes and how much time did he spend dealing with the penalty? Did he take advantage of all possible deductions? Does he know of all possible deductions? Did he depreciate all things as much as possible? Did he take income as salary or as distribution?
My accountant is worth every penny I spend on him as he does save me money and time and makes suggestions as to improve my bottom line with things that I had no idea about.
My $0.02 worth.
Bruce
Hiker,
Great point! If you are really busy and don't want to spend time doing all that number drugery (I personally hate doing anything like that) then the accountant is worth it.
But I guess if you are sitting at home waiting for the phone to ring and trying to save every penny you can during these rough times, than maybe its a different story?
But yeah, what is your time worth is the basic question?
I'm big for professional advice.
But in your case and your experience with the software, I'd suggest you sign up for those free or almost free tax classes from H&R Block (not that I like their practices or philosophy, but they do stick to the facts). Then afterwards, re-set up your turbotax categories and religiously enter everything. Review these categories every year and how they interact with your tax forms.
The first year or three, simply have your tax man review your efforts. It'd be less than his current price because you've done the hard stuff.
His subsequent comments will tell you when you're ready to do it on your own.
Exactly! Do that:1) consistently and thoroughly.
2) Then, find a really good locally reputable accountant who charges by the hour.
3) Ask him/her how they would like to receive your information (quickbooks, excel, notebook paper, etc.) and what information you can summarize for them that will save them time.
4) Use him/her every single year, even if they swap firms follow them.Do this, and the cost of your return should be less the 2nd year and maybe even the 3rd (without respect to inflation)You'll pay much less than the guys who bring in their stuff in wal-mart sacks or grimy cardboard boxes, and you'll have a professional CPA competently prepare (and sign!) your return.He/she is up-to-date on current tax regs/strategies/benefits and while preparing your return will simultaneously (at no additional cost to you) review your return for benefits you might miss.No matter how you look at it, keeping good records throughout the year pays off. Once you make that step, what's $75 - $100 bucks an hour for 5 hours for professional service that will provide you peace of mind, prevent an audit that could take you off the jobsite for days, and maybe even save you some $$$?
The Block course spends LOTS of time on things like earned income tax credits, childcare tax credits, retirement income taxes, etc."Total Time: 69 hours*
Course Topics: * Filing requirements and filing status
* Exemptions
* Income and wages
* Interest and dividends
* Credits (EIC and Child Tax Credit)
* Deductions (itemized and standard)
* Health savings accounts
* Charitable contributions
* Education credits and other credits
* Traditional and Roth IRAs, Saver's Credit
* Adjustments to income
* Retirement planning and income
* Social Security, pensions, annuities
* Tax payments and tax planning"I know that they do touch on business and rental and deprication, but very, very limited.Right now I can't find any details of their advanced courses. But they are not cheap and the last time that I looked they too specialized.For example they did not have any courses for rental owners. But they had 3 or 4 classes that where needed to cover that area in detail.But taking the class goes give you some idea of the 'logic' (boy I hate to use that term talking about the tax forms). But quickly ignore it and allow the software to take the data to the right line.But a trade organization, CC, adult ed, community college, etc might have more appropriate tax class."Then afterwards, re-set up your turbotax categories and religiously enter everything. Review these categories every year and how they interact with your tax forms."With few exception the catagories on sch C are not that critical. It comes out the same regardless of which expnese line it you put it on.For a contracting business (not a developer or holder of spec houses) the taxes is not the important point.The bookeeping is. Are the books setup right to track the expenses and income on a project and so find your cost..
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A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
An accountant performs a service that he is good at. He can do it faster than you and hopefully do it correct the first time. Do you sub out your roofing to someone who can do if faster and better than you? Foundations? Truss making? Payroll check writing? Tax returns?
You get out of life what you put into it......minus taxes.
Marv
Do you understand my he puts what where on the turn?
Ask I mentioned to Pete I would be more concerned in how the books are setup than doing the taxes.
And even if you have tax pro do it. If you come in with a everything already laid out in the right catagories and things like capital equipement listed with the dates and prices, etc most of the work is done.
If you go in with a checkbook and 12 months worth of CC and trade account statements it will take a lot more time and $$$.
If you don't that setup now this is a good time to go to tax pro and set down and hire 1-2 hours and go over everthing.
.
A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
Guys,
Yes, we keep our own books and all and just use the accountant for the year end taxes...still trying to save some money thought being I feel we do most of the tough work throughout the year.
So as a supplemental question...do you guys do your own personal taxes?
We do our own postings into QB and ship the monthly off to the accountant. The accoutant does payroll too. They do quarterly tax checks and year end taxes. They also do my personal stuff but mine is kinda complicated as my rental stuff is in my name only.
When I was younger I watched a truck repair shop get auctioned off. The owner had fallen behind on things during the mid eighties slump. As time went on he paid the local vendors but started falling behind on his federal stuff. Figuring he had to face the local guys but the Feds were a long way off.
One day the IRS showed up and chained the doors to the building. He was not allowed back in until the day of the auction. I watched him ask the guy who bought his desk if he could have the photos of his family.
I have had an accountant since the day I started in business because of that experience. It is so easy when things get rough to make some bad decisions. I decided early on that if we had any financial issues it would not be with Uncle Sam.
The federal government is the only folks I know that can take away your business in one fell swoop leaving you with no recourse until after the fact and then you are dealing with an adversary with unlimited spending power for legal assistance. Unlike yourself. DanT
Yes.
I've always done my books but I have an accountant for taxes and occasional questions that come up.
I'd be completely lost trying to do my taxes. I watch her getting my things together and consider how much booze i'd have to drink to do what she does without going nuts.
Family.....They're always there when they need you.
It's not an accountant that is important.
It's a GOOD accountant that's important.
I used one reccomended by a friend. My last year in business for myself was 2002.
I just got a letter from the IRS that an issue from 2000 was settled, along with a check that was a return of penalties and interest I didn't owe.................two days ago.
Long time to have a few thousand tied up.
I know someone who saved 40k because they had a good tax atty and acct. They were ready to write the check but the professionals told them not to.
My wife's a CPA, so yes, I do have a professional do my accounting.
And the price is right.
Most of the time.
I never used to, but the last few years, I got lazy. Funny to, as I was only 3 college course hours from being able to take CPA exam.
I am not current on tax laws and don't want to be!>G<