taxes and expenses

[limbhanger]

Looks like next year my lco is going to be a little bigger than I expected. Up to now The money per year has been small. Mostly family and a few one timers. But I have stumbled on to a rather big commercial account and it is time to get serious about the tax man. This morning at the resturant some one was talking about this deal that the govt. has on buying a 3/4 ton truck and the big tax break on that size unit. Also the subject of a first time 100,000.00 equipment write off for the next 15 months? I went to my tax man about keeping up with my lco and he wants 65.00 per month! Do you guys take your stuff to a tax dude every mo. or can I do it once a year? Sorry for the dumbness, I have worked for the man all my life and the other side of the fence DOES have more Nitrogen! thanks

[kutnkru]

I think the $$$ spent on a CPA are the BEST ones you will ever spend if you've invested wisely.

Who else is going to let you know that if you dont get rid of that $15k its going to Uncle Sam and that NOWS a good time to upgrade this piece of equip or that veh???

And how else will they be able to assist you if your not consistent in your dealings with them ,,, so YES I would STRONGLY advise that you find the BEST CPA you can ,,, and get real COZY ,,, cause he/she is about to let you know HOW LONG it is before you get that new vette or scarab boat.

[Elwood]

Not all accountants are good for the green biz. You need to "interview" them. They need to understand the service business AND especially the green business.

Good Luck!

[PearceTurf]

Looks like next year my lco is going to be a little bigger than I expected. Up to now The money per year has been small. Mostly family and a few one timers. But I have stumbled on to a rather big commercial account and it is time to get serious about the tax man.

Limbhanger, congratulations on the growth of your business. Your situation is similiar to mine in several ways. I started out with a bang, then slumped for awhile and let it frustrate me. Then I landed some nice accounts and I'm back on my feet again.

As far as using a CPA on a monthly basis, you will have to decide on a few things first. I have mentioned before that my wife is a CPA and I don't say that to brag, but just the opposite. I have recieved a mint of good information on this site and she knows I spend alot of my free time studying to further my knowledge. She is proud of my growth and she understands that I want to help out others in the same fashion that people helped me. So she is willing to answer questions when she has time. She worked as the accountant for construction and LCO companies for years while attending school and even worked one summer on the crew to get exercise and knowledge. She was very instrumental in helping form my new company and she is my biggest asset in more ways than one. LOL

I talked to her about your thread and she gave me a few things to consider before I posted here on this subject. Here are some of the things to consider from her point of view:

Does this monthly charge include your year end tax return or will that be an extra charge?

Are you on top of your own record keeping, such as entering and filing reciepts on a regular basis or do they tend to pile up? How about milage logs or bank reconciliations? I find myself slacking in these areas sometimes and I consider myself lucky to have a constant reminder to keep up on the books.

With this monthly payment, do you get updated copies of items such as P & L, trial balance, general ledger entries and so forth each month or do you just give him the books and wait for the results?

In paying this monthly charge, can you call them up and ask a quick question and get a quick answer or do you have to make an appointment in a more formal atmosphere?

The reason I asked this last question leads to my final question and opinion on this matter.

Is this CPA a person you consider a friend or just a business contact? Mine is my best friend (of course) but my insurance agent, my attorney and my PT worker are all friends of mine. Some of my customers are friends as well, just not the ones who expect a discount in exchange for their friendship. I feel at ease when talking to these professionals when I need their help.

I apologize for the length of my reply but some of these rhetorical questions may be factors to use in deciding whether it is worth your hard earned money. You will hear many differing opinions and that is the beauty of advice forums. The ultimate decision will be yours alone. Feel free to PM me if you have specific questions on issues and we will do our best to help you out.

[Banjopicker]

CPA's are similar to LCO in that they both work on an hourly basis. Me knows because me is both. That being said, I'd recommend you have your accountant help you set up your accounting system (viz. if you want to do some of that type work yourself). You can use Quicken, or some other software program. He/she may be able to handle your work on a quarterly basis and save you some money. If you have payroll, let the accountant handle it monthly. Most importantly, when major purchases or business changes are considered, consult with your accountant before the fact. (example, vehicles weighing >6000 lbs or <6000 lbs have major tax consequences )Keep in mind that the more time your accountant spends on your work, the more the charge. Because in the variability of tax returns, the monthly fee probably won't include tax prep.

[Alpine Naturescapes]

The monthly fee doesn't seem bad, but I do it all myself with a financial accounting program. The $60 is better spent on advertising. You do need to have someone to give you good tax advice though, at least once per year. As for the 3/4 ton truck - it doesn't sound like too good an investment for you. The rule is if it's > 6000 lb, you can depreciate it all in one year, versus other passenger cars which have limits on depreciation - you need to have the income for it to offset though or you are wasting the depreciation - except what loss you can rollover. For many small guys with kids, reducing their income to $0 is very bad tax strategy - you'll lose the earned income credit for one thing, which can more than offset the SS tax etc. So, yeah, get good tax advice before you make these major decisions.

[edrenckh]

Keep in mind, anyone can do books. Some CPA's are just order takers. They don't give strategy. They stay way to the side of caution, they don't have aggressive tax avoidance advice.

Make sure if you want to avoid (not evade) taxes, you get a CPA that is willing to give good advice to help you plan. They should recommend deductions, tell you what others do, help you get into the mindset.

All to often they are just trying to 'do the books' and make their life easier.

[Phil Nilsson]

If you need to find a CPA who understands the green biz, contact a local green industry trade association in your area, see who some of the members are using. Run quickbooks for all reasons stated above, the CPA is there to make year end adjusting entries to your figures from quickbooks (if on accrual method)... and do tax prep & advice.

Phil