How to Stay on Your Accountant's Good Side: The Top 5 Questions New Business Owners Should Ask CPAsLinda Jenkins, January 24 2017
One of the most important relationships you will forge in business is with your Certified Public Accountant. Your CPA can save you thousands of dollars on your personal and business taxes every year, but only if you are both on the same page. In order to stay on his/her good side, there are certain questions you need ask as a new business owner. Be sure to ask your accountant these 5 questions, even if you think you already know the answers:
How should I structure my business?
From LLC to C corp, there are many considerations when choosing a business structure. For the majority of new small businesses, a LLC will make the most sense, but your CPA and attorney are the best ones to consult on this question.
Can I use my retirement account to fund my business?
This is important to ask before doing because getting this wrong could cost you huge tax penalties. In most cases, you cannot fund your business from a standard IRA, but switching to a self-directed IRA may make this a possibility.
What should I do if I need additional capital?
For most small businesses, the complexity of issuing minority ownership stock/shares/partnerships is more trouble than its worth, so nine times out of 10 the answer will be to take on a loan or seek crowdfunding.
Can I pay my family members to work in my business?
If you are married and filing jointly, it probably does not make sense to add your spouse to the payroll. However, if you have children between the ages of 13 and 18, they may be added to your payroll without incurring social security tax. There are no special tax consequences to adding other family members (uncles, cousins, etc) to the payroll.
What type of accounting software should I use?
Quickbooks or Xero are generally good choices for most businesses, but your CPA may have a preference here, so ask. Here is some other stuff to think about when choosing accounting software.
There are lots of other questions you will eventually need to ask your CPA, but these five will get you started in the right direction. A good rule of thumb is to write down concerns you come across in the course of running your business, then address those concerns during quarterly conversations with your CPA. This way you both stayed informed and your CPA can help you minimize the taxes you have to pay.