Small Business Owners, is $280 too much to pay the CPA to file? (incorporated, s-corps)
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Do it yourself? If you're into DYI, how about dental work or legal work too?
It is stupid that someone thinks that paying $280 is absorbent or that you should do the work yourself. TurboTax is fine if are an individual with W2 and perhaps a 1099 or two.
Being tax laws change every year, I am guessing most owners don't have the time to learn the changes. A CPA (or) a decent accountant will keep you from going to jail. If you are part of a publicly traded company does the "Sarbanes-Oxley Act" ring a bell? They are also are your advocate when you face an audit from the IRS.
Also an accountant will help you manage your tax liability. They will make sure that your records are in order and able to tell you if your business is turning a profit or loss. Also telling you where your cash is going, where efficiencies can be found.
Sure QuickBooks can help, it is only a tool and is only as good as the information you input. Using it doesn’t always give you information needed.
As much as people like to run accountants into the ground, they serve an extremely important role in a business. The same applies to an attorney. Instead of wondering if the cost is out of line, consider that the fee is deducible on your next years filing. It is a cheap CYA in the grand scheme of running a business.
Do it yourself? If you're into DYI, how about dental work or legal work too?
Umm....so if someone advocates doing a particular thing by yourself, they should then do everything themselves? I don't know, seems pretty silly... Though I do deal in some legal matters, but just the ones that I commonly encounter.
Regardless, I advocate that small business owners do their own taxes because taxes are a highly internal part of business and they should have a very good understanding of them. So since you're already doing the learning, you may as well do the taxes yourself and save some money as well. Though as a business grows, it can certainly make sense to outsource some or all accounting functions, but that should only be done once the business can afford a serious accountant (most aren't worth a dime...) and already has a good understanding of accounting/taxes. Of course, when you get very large you'll have an in-house accounting team.
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Originally Posted by SD4020
A CPA (or) a decent accountant will keep you from going to jail.
No, being honest will keep you from going to jail. People rarely go to jail for tax matters even when there is malicious intend, but the IRS isn't putting anybody in jail when there is no malicious intend. So be honest, do things to the best of your knowledge, when in doubt call the IRS...and you'll be fine.
The tax industry uses two things to trying "scare" people into using their services:
1.) The idea that they can protect them from the big bad IRS, or that you even need to be protected in the first place.
2.) The idea that they posses some sort of esoteric knowledge and will find deductions that you couldn't otherwise easily find....
With the exception of large business, and folks with significant wealth, there is little reason to hire a CPA to do your taxes...
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Originally Posted by SD4020
Also an accountant will help you manage your tax liability. They will make sure that your records are in order and able to tell you if your business is turning a profit or loss. Also telling you where your cash is going, where efficiencies can be found.
Business owners need to understand these things themselves, trying to outsource key aspects of business is likely to end badly.
That depends on what they are doing, but you should just learn to do it yourself. Most accountants aren't worth $1, let alone hundreds.
Nobody is stopping you from doing your taxes yourself. To say accountants aren't worth $1 is highly insulting to people who have gone through the schooling and passed the exams necessary to become a CPA or any other type of accountant.
Taxes aside, accountants provide many valuable services to a company. They are not just "bean counters." They manage revenues and costs, prepare and examine financial statements and other federal filings, make sure you are in compliance with state and federal regulations (ever hear of GAAP or SOX???). Some provide financial planning and analysis and some protect you from fraud.
I assume you do not have an accounting degree, or you wouldn't be making such asinine statements. If your business is small enough that you can do all those functions yourself, congratulations. However, you are no accountant. If you ever grow your business, maybe you will see the value in those people you choose to now insult.
I will get more information from a business from a P&L statement not a tax return.
Crimial charges are usually last restort. While you tout honesty have an external review is an advantage to keeping a business honest. So as asserted and you categorically fail to grasp, it helps to manage liability. Interest and penalities are more to the IRS' suiting. Again if you want to take that risk go ahead.
You honestly thing that signifiant wealth is the only reason? How can you honestly substanite that?
The reality is:
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Certified public accountants (CPAs) provide a broad range of financial services to small businesses. These services include preparation of financial statements and tax returns, providing advice on various aspects of business (operations, management, etc.), and assisting in the development and installation of effective accounting systems.
Unlike large corporate enterprises, small business owners may not need continuous accounting services. Still, small business owners need to ensure that their enterprise operates in accordance with the complexities of modern finance, and that they have an informed understanding of the business's financial health in order to ensure that they can make sound business decisions. Many entrepreneurs and business owners turn to CPAs for help in these areas. For a small business, financial mismanagement can spell failure, so choosing and using the services of a CPA are critical to business success.Read more: certified public accountant: Definition from Answers.com
As much as I hate wikipedia this is also important to note
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The primary functions CPA fulfill relate to assurance services, or public accounting. In assurance services, also known as financial audit services, CPAs attest to the reasonableness of disclosures, the freedom from material misstatement, and the adherence to the applicable generally accepted accounting principles (GAAP) in financial statements. CPAs can also be employed by corporations—termed "the private sector"—in finance functions such as Chief Financial Officer (CFO) or finance manager, or as CEOs subject to their full business knowledge and practice. These CPAs do not provide services directly to the public.
To say accountants aren't worth $1 is highly insulting to people who have gone through the schooling and passed the exams necessary to become a CPA or any other type of accountant.
I said "most accountants" and "going through schooling" doesn't mean much these days. Regardless, the problem as I see it is that good accountants aren't going to be dealing with small businesses and middle-class individuals. There just isn't enough money.. Though you could get lucky, the vast majority of good accountants are working for large corporations, doing corporate accounting, accounting for wealthy folks, etc. So where does that leave a small business owner? With a bad to so-so accountant in which case I think just doing it yourself is a better option.
I suppose there are some people that are just terrible at this sort of thing in which case even a so-so accountant may be an improvement. But if you're reasonably skilled in finance, and a business owner should be, then doing your own accounting/taxes makes a good deal of sense.
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Originally Posted by TheBeagleLady
If your business is small enough that you can do all those functions yourself, congratulations. However, you are no accountant. If you ever grow your business, maybe you will see the value in those people you choose to now insult.
Your business has to get pretty large before accounting starts to take up a lot of time, not to mention it also depends on what you're doing as well. Whether or not I'm officially an "accountant" is immaterial, accounting (at the small business level) is simple and one can easily educate themselves about it.
Regardless, I'm by no means suggesting that everything should do their own taxes, just that most small businesses and individuals would be best served by educating themselves and doing their on taxes/accounting. Obviously, at some point, a business owner(s) will have to farm out their tax/accounting functions. Maybe they outsource it, maybe they hire someone in-house, but at some point they won't have the time. But by doing their taxes/accounting when they were smaller, they are going to have a great understanding of matters going forward.
So as asserted and you categorically fail to grasp, it helps to manage liability. Interest and penalities are more to the IRS' suiting. Again if you want to take that risk go ahead.
Except that a CPA doesn't protect you from interest and penalties. You are again trying to use a scare tactic, when the reality is that the IRS is pretty forgiving. I have been fined twice by the IRS and in each case it was easy to get the fees abated. They have always been pleasant when I've called them, etc.
So to say it again, if you are honest, doing things to the best of your knowledge (and have made efforts to learn), and seek information when in doubt...you don't have much to worry about.
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Originally Posted by SD4020
You honestly thing that signifiant wealth is the only reason? How can you honestly substanite that?
I said wealth and larger business and its easy to substantiate, the vast majority of small business accounting/taxes and personal taxes are easy to deal with. Its well within the reach of anybody that is willing to spend a little effort learning about it. The only real issue is whether the time is worth it, and if you're talking about standard accounting/tax filing then I'd suggest the answer is "yes" since you'll be dealing with these things every year. On the other hand, it probably doesn't make sense to learn all the details of one-time issues. For example, small business converting their LLC to a c-corp would be best advised speaking with a good business tax professional.
Anyhow, I'm no sense suggesting that small businesses should just "wing it', no they need to educated themselves on the relevant accounting/tax principles.
It would benefit everyone to learn what they can. If someone wants to do it all on their own and take that risk, more power to them. However, there are good accountants in all industries and all levels and to say that the good ones are only working for large firms or corporations is false. There were plenty of bad ones working for Enron and Arthur Andersen.
To say most accountants are worthless (lets face it...$1 is worthless today) is false and insulting. You might not put much stock in the education required, but it is not easy. Whether or not they are needed for a small business, to denigrate an entire profession because you can do a few journal entries and balance a checking account is just flat out rude.
Regarding the OP, depending on the business itself, $280 really isn't that much.
That depends on what they are doing, but you should just learn to do it yourself. Most accountants aren't worth $1, let alone hundreds.
Terrible advice. A good accountant keeps you out of trouble, finds way to increase your profitability, and allows you to devote your time to the things that make you money.
As a business owner, you do not have the time or the knowledge to learn every single nuance of the tax code. What's more, you do not have time to absorb the torrent of changes that happen every year. Further, given that you should be devoting the large majority of your time to actually operating your business, paying someone else to file your returns and help with your overall tax planning is a no-brainer. In fact, simply hiring the guy to look at your books around December 1 and start the year-end planning will pay for itself many times over. Because I ran my books on an accrual basis and paid taxes on a cash basis, just having someone run through the conversions and birddog the problem areas is an enormous help. One year alone, my tax planning meant a tax savings of roughly $70,000-$80,000, savings that would have been very hard to achieve on my own given how busy my year-end always is. Compared to that, the $700 I paid was chump change.
Further, any small business owner faces the constant possibility of a tax audit. If you do your own taxes, that means that, when one has to face the boys at the IRS, it's just you across the desk from them with your pile of files and receipts--regardless of how painstakingly you keep records and how conscientiously you file. On the other hand having a relationship with a good CPA means that, should you actually be audited, the CPA walks in there with your return, is able to explain everything within the context of the tax code, and can negotiate on your behalf based on years of experience and relationships with the auditors. You don't even attend the meeting. The one time I run afoul of the Feds over some alleged problem with my return, my CPA made two phone calls, sent a letter, and cleared the matter up within days. Instead of sucking up 2-3 hours of my time at $150/hour, not to mention additional mental energy, my accountant's bill was less than $100. To a smart business owner, this represents an enlightened choice.
If you own a business of any substance, there are two areas where you do not skimp: Lawyers and Accountants. Because not only will both save your bacon if you get into a dicey situation, but both have the potential to save you very large sums of money.
Except that a CPA doesn't protect you from interest and penalties. You are again trying to use a scare tactic, when the reality is that the IRS is pretty forgiving. I have been fined twice by the IRS and in each case it was easy to get the fees abated. They have always been pleasant when I've called them, etc.
So to say it again, if you are honest, doing things to the best of your knowledge (and have made efforts to learn), and seek information when in doubt...you don't have much to worry about.
I said wealth and larger business and its easy to substantiate, the vast majority of small business accounting/taxes and personal taxes are easy to deal with. Its well within the reach of anybody that is willing to spend a little effort learning about it. The only real issue is whether the time is worth it, and I'd suggest that the answer is "yes" since taxes/accounting are something that you'll be dealing with every year you're alive.
Anyhow, I'm no sense suggesting that small businesses should just "wing it', no they need to educated themselves on the relevant accounting/tax principles.
You claim that a CPA don’t protect you, they help you to avoid such folly as interest and penalties. Yes, if you had a grasp of basic concepts avoidance is a form of protection.
Once again, you somehow think that those will smaller amounts of wealth can't erroneously be advantaged to use a CPA. The old saying “An ounce of protection is worth a pound of cure.”
Taxes for individual working for a W2 is slightly different that owning a business. Maybe if you understood the concept of GAAP (Generally accepted accounting procedure) which is the most basic concept introduced in even the most basic of accounting classes. Again, external review of the records is important. Should an owner understand the basics of accounting? Yes. Being logic is clearly a shortcoming for some here… That doesn’t equate to relegating accountants to being worthless or unnecessary. Nor does it warrant concluding that using the services of a tax accountant or CPA as being frivolous, as some try to unsuccessfully assert.
For someone who was fined twice by the IRS you'd think the song would change. Apparently some are slow learners.
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