What is a Full Service Accounting Resource?
Taking the title a little farther, what is a full service accounting resource, and when do you need one? The second half of the question is easily answered, as the right full service accounting solution will allow you to transition into services as you need them. The solopreneur just starting out can take advantage of just what they need and use more services as the business grows.
For the first half of the question, the services that a growing business will need over time include those to account for their income and expenses and to also save on taxes and invest for retirement.
For the brand new business entity, help from the experts in the choices for tax entity formation can make a huge difference in liability and taxation down the road. Even the established business can find a time when a change in entity formation is necessary. Many that start out as sole proprietorships end up as other pass-through entities like partnerships or S-Corporations. Working with accounting professionals will help you to get set up properly and make a change later if necessary.
The temptation to do as much of your own bookkeeping as you can to save money is strong. But, when you look at the time you take away from growing your business for these number-posting tasks, it could be much better spent in serving customers or clients. Using technology to feed your income and expense activities to your bookkeeping service can free you up to make more money and save more of it on taxes.
Even the solopreneur will usually use a tax preparation service, as there are many forms and constantly changing rules that make proper filing of a return something you just do not want to take on. Errors will cost you money. When seeking out just a tax preparation service, you are missing out on the cooperation of the throughput from bookkeeping to tax preparation. Working with the same chart of accounts and practices, the tax return will be more accurate and not miss money-saving tax tools when both functions are under the same umbrella.
Businesses that have been operating for a while will always have some inefficiencies and possibly inaccurate or outdated practices that are costing the business money. A thorough examination of recordkeeping and past tax returns can clean up procedures resulting in a more efficient accounting function and save you money as well. Business cleanup involves digging out the problems and fixing them.
U.S. tax law: “The U.S. tax code is the most complex in the world, chock full of perks to special interests and social engineering. It is incomprehensible, and often produces unjust results. In 1913, our entire tax law was 27 pages. It’s now over 4 million words, 9,000 bloated pages. From 2001-2012 alone, there were 4,600 changes, more than one a day…Individuals spend 6.1 billion hours a year doing their tax filings, the equivalent of a year’s work for 3 million full-time workersi.”
The right full service accounting resource will stay on top of the many changes, helping you to adapt and respond to maximize your profitability while legally minimizing your taxes. Regular meetings with your resource professionals for planning are crucial.
It does not matter how professional and expert your accounting and tax team, if they are aggressively looking out for your tax dollars, at times there could be a questioning letter from the IRS. A fast and professional response with detailed data to back it up will usually end the examination quickly without penalties. The key is to have professionals that are approved to act on your behalf with the IRS.
When all the above services come together, your business can grow aggressively, and those profits can start to pile up. At some point, you may reach a financial status that the IRS will recognize as that of an Accredited Investor. It opens new avenues and asset classes for investment that are not available to other investors. Your full service accounting resource can help you to reach this special investment status and grow your wealth.
No matter what stage of growth of your business, consider finding a full service accounting resource that will partner and grow with you.