It can be expensive to work with an accountant. Do you really need one? And what, beyond filing your tax return, should you use them for?
If you’re serious about growing your business, the right accountant can help you make long-term strategic financial decisions. They can also help with
- lease negotiations,
- cash and treasury management,
- ongoing tax reporting,
- and financial planning.
They can even help you change business structures.
How to find an accountant that’s right for you
The best advice we can offer is to work with someone who really gets your business.
(Why should you listen to us? We’re Bench.co – we specialize in professional bookkeeping services for your business.)
Ask contacts in your industry to refer you to their recommended accountant or accounting firm. Once you’ve secured a few leads, arrange to meet each accountant for an initial consultation.
Here’s what you should assess during your meet and greet:
They understand your business: An accountant who works predominantly with clients in your particular industry will hold specialized, up-to-date knowledge that could help you take advantage of tax breaks and deductions available to your business. They’ll also know how to navigate your type of business through any changes in tax law as and when they happen.
They get past the jargon: Tax regulation contains a lot of technical language. Find an accountant who can explain high-level tax topics in an accessible way. A pro who helps you understand financial topics more deeply will teach you to better understand and manage your own business.
They can handle your business needs: Depending on the size and complexity of your business, you may require a strong team to dedicate themselves fully to your business’ needs and work directly with you on high-level business planning. Make sure whoever you choose to work with has the capacity to handle your present and foreseeable future accounting requirements.
How much does an accountant cost?
Many accountants charge by the hour. Some work on a monthly retainer. And accounting costs can vary greatly depending on the level of service provided.
Accountants will generally offer you a free consultation to discuss your business’s needs before you decide to work with them, so be sure to ask about fees up front. This is also the best time to determine how frequently you’ll need to work with your accountant. Again, depending on the size and complexity of your business, you may need to meet with your accountant yearly, quarterly, or even monthly.
Ask for quotes from a few different accountants and compare your options. It’s also a good idea to ask for a total yearly estimate based on the price they quote you.
On average, the cost of professional tax preparation in the U.S. falls somewhere between $220 (filing a Form 1040 for a self-employed individual) and $800 (filing a Form 1120 for a C corporation). While it may be painful to shell out that kind of money for taxes, think of the time and stress you’ll save yourself by hiring a professional.
What’s more, a tax pro will help you take advantage of financial opportunities, deductions, and tax benefits you may have previously missed. These savings alone can end up saving you more than what you’ll pay in accounting fees.
How to work with your accountant
Here are some tax-specific topics your accountant should cover with you. They’ll help you work together effectively and ensure you haven’t overlooked anything before filing your next tax return.
(If they don’t, bring up these topics and start interviewing new accountants for next year!)
Deductible business expenses and how to maximize deductions
Costs that are ordinary and necessary to running your business are fully deductible as business expenses. Your accountant will consult on whether you qualify for certain deductions and find ones you may have missed.
While many business expenses are fully deductible, some are only partially deductible. Examples include food and beverage costs, and anything with mixed use (home office, cell phone, internet connection). Your accountant can sort out the deduction for each item based on the percentage you use it in your business versus personal life.
Good accountants will schedule a tax planning meeting or phone call prior to year-end to ensure you maximize your deductions and thus lessen your tax bill.
Health insurance deductions
As a self-employed person, your health insurance premium is a deductible expense. However, if you participate in your spouse’s employer’s insurance plan, you can’t deduct the cost of a different plan you opted to pay into instead.
Your accountant can elaborate on these rules and determine whether your plan qualifies as a deduction.
Changes to tax regulations that affect your business
Most accountants are required to spend a certain amount of time each year studying and understanding tax regulations.
Good accountants will contact you when tax regulations that will affect your business change and counsel you on how to leverage the changes to your advantage (or to less disadvantage if the changes negatively affect your business).
How your business’ legal structure affects your tax filing
Your accountant should help you understand what, if any, tax requirements are unique to your business’ legal structure. (If you’re having trouble understanding them, don’t worry: we’ve been there, too. Don’t be afraid to ask questions or go over it until you do understand.)
Good accountants will also discuss with you when changing structures will help you get a better tax return.
In addition to filing a great tax return, working with the right accountant on a long-term basis can lead to faster growth and ongoing financial success. It’s a business investment that requires time, effort, and money to get right, but in the long run it’s one you’ll be glad you made.
- Do you have an accountant you love?
- How have they helped your business succeed?
- What made you select them?
- Do you have any additional questions or reservations regarding hiring an accountant?
- What has prevented you from hiring an accountant thus far?
- At what point would you consider hiring one?
Share your two cents in the comments!
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