We know that every business is different. While you might be offering the same product or service as your competitors, you don’t do it in the same way. Your team might look different, and your expenses are probably not the same either.
The same goes from industry to industry. There are so many variations between different industries and with every variation, the tax implications and the way you keep your books will change.
Most CPAs are pretty adept at digging into different businesses to find out more about how they operate. But that’s not always the case. Your CPA needs to know a number of things about your business and your industry in order to help you make the most of every dollar.
As you begin working with a new accountant, or even if you have an extended relationship with one, make sure that he or she is clear on the following things.
How and where you operate
Cloud-based businesses look much different than local brick-and-mortars. Expenses will focus more on subscriptions, coaching and trainings versus utilities and real estate. The overall business model of an online company is also much different from a local business and overhead is often much lower (and more discretionary). Your CPA needs to understand this and be able to save you money on some of the non-essential expenses and your home office deduction.
What type of team you have or need
As you grow, you’ll need to hire help onto your team. When hiring for a physical location, you’ll likely bring on employees who work set hours and receive training in-house. Online businesses generally hire contractors who already have a level of expertise in their specific field and who work very flexible hours. Some industries require certifications and specialized training. And all of the hires you make have different tax implications. Your CPA can help you make the right hiring decisions when choosing to hire an employee versus a contractor.
What recurring expenses include
Every industry has different needs that incur expenses on a regular basis. Industries that require certifications and licensure need to budget for those expenses each year while businesses with a physical location have to consider rent and utility costs. Some industries have to deal with government fees while others need to consider sales taxes. Even online, service-based businesses have recurring software, subscription and internet expenses.
What the big picture might look like
As business owners, we all have goals. Such as, increasing your revenue or adding a location –your accountant should discuss how reaching these goals may affect you financially and how you can prepare for them. Preparation and education are key factors for growth. You don’t want to be surprised by a large tax bill at tax time. Tax planning with your CPA will relieve the tax burden (at tax time) and thus allow you to set aside the money throughout the year. Additionally, they should be able to guide you to accomplishing your goals, from a financial perspective, with what’s coming up in the tax law “arena,” what changes to expect, etc.
Growing a successful, sustainable business is no easy feat. It takes the dedication and expertise of a number of team members, not the least of which is your accountant. If you don’t feel like your CPA is a dedicated partner in your business and that you’re not making the gains you were hoping for, it might be time to start looking for someone new. But know that it takes dedication and work on your part to ensure you hire the right fit.
