What Your Accountant Needs To Do Your Taxes

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Tax Items

Tax season can be one of the most stressful times for your company. It is stressful for a plethora of reasons, but mainly because suddenly you have to look Uncle Sam neatly in the face and hope that you handled things correctly throughout the year.

For many small businesses, tax season is the only time that hiring an accountant sounds reasonable, and it is only during this limited window that accountants are able to clean up the mess you have created throughout the year. If you be one of those businesses which only hires an accountant during tax season, it’s important that you equip them with the items required to do your taxes. Below are just a few items you’ll need when hiring an accountant to do your taxes:

  • Financial Statements
  • List of Capital Asset Activity
  • Vehicle Log
  • Office Expenses
  • Other Sources of Income

While most accountants may ask for other documentation, the above items are a great place to start, especially if you’ve never hired an accountant before. You will want to make sure that you provide them with more than enough information to ensure that they’re able to help you lessen the stress load which inevitably comes during tax season.

What other items have you found to be helpful when hiring a new accountant? Share those additional items in the comments below and help another business owner have a less stressful tax season.

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Why Your Accountant Uses a Balance Sheet

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Balance Sheets

Once of the most important tools you will ever see your accountant use is a balance sheet. A balance sheet is a financial statement which gives an accountant insight at any given time as to what exactly your business is worth. The overall purpose of the balance sheet is to help the company determine where they stand financially for both tax purposes and also for business purposes.

In a well-conceived balance sheet, you will be able to identify the total number of assets a company has as well as the amount of equity. Unfortunately, balance sheets cannot show everything; however, they do a great job at showing increases and decreases in revenue.

What Does a Balance Sheet Look Like?

A traditional balance sheet generally has two sides which are required to balance each other out. For example, if you have a company and you decide to withdraw a $1 million loan from the bank, your assets would increase to $1 million but your liabilities will also increase because they have to balance each other.

Simple Equation

The formula of the balance sheet is quite simple: assets = liabilities + owner’s equity. The balance sheet literally has the power to provide a snapshot of your company’s accounts at any given time. This sheet, combined with your income and cash flow statements, can be a critical piece of documentation, especially for investors.

Defining Terms

So what exactly are liabilities and assets? Well, it’s quite simple. An asset is property owned by a person or company, regarded as having value and available to satisfy debts, commitments, or legacies. A liability is defined as a company’s financial debt or obligations which arise during the course of its business operations.

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Hiring an Accountant vs. Finance Intern

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Accountant vs. Intern

When many companies first begin, they often struggle with whether or not they want to hire full-time employees or pursue the alternative route and only hire interns. While interns are a great asset to any and every business, you have to know when to draw the line and know when to hire a full-time employee or an intern.

Below are just a few of the pros of hiring an accountant as opposed to an intern:

More Experience

Let’s face it. I know every business is looking to save money, so instead of hiring a full-time employee, many companies resort to hiring interns. While you may save money, hiring a full-time employee means you’re hiring someone with more experience. The more experienced your team, the more chance you have of avoiding mistakes.

Quality Assurance

Quality assurance is almost guaranteed when hiring a professional accountant. You don’t have to worry about micro managing an accountant like you would an intern, and so you save yourself a considerable amount of time and energy.

Trustworthy 

When you hire a full-time accountant, you should never have to worry about constantly having to look over your shoulder or having to see what your employee is up to; instead, you should have the confidence that the individual you hired can be trusted with their expert knowledge.

Have you found hiring a full-time accountant to be more cost effective than hiring a full-time finance or accounting intern? We want to hear about it. Leave your comments below.

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Three Secrets You Should Never Keep From Your Accountant

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Secrets Your Accountant Needs to Know

Having an accountant can sometimes be a gift and a curse. Oftentimes, people view accountants as babysitters because they often ask you to keep them up to date with all things related to your finances. While this may be an annoying practice, most accountants generally do this to make sure you’re not making poor financial decisions which could later put your business in jeopardy. Open communication with your accountant is critical, especially when working with a new accountant, and it’s best to understand that your accountant isn’t trying to control your life but is trying to help you keep control of your finances.

Below we have listed three secrets you should never keep from your accountant:

Money Spending Habits

Do you spend money just as quickly as you get it? This is something that your accountant needs to know about to make sure he or she is properly monitoring your habits. Again, this isn’t to put a constraint on your finances, it is designed to make sure that you’re not making bad decisions which could ultimately impact your business or your personal finances.

Past Debts

The past may be the past, but sometimes your past can come back and haunt you. In fact, sometimes the past can be so daunting that it rains into your future. Because of this, you will want to make sure your accountant knows about all of your past debts, especially those you have yet to pay off.

New Debts

Did you just take out a loan or get a new credit card without notifying your accountant? Think again. Anytime you open up a new credit line or loan, your accountant should probably be the first to know. This again will help ensure that you’re not making emotionally driven decisions.

What other things should your accountant know? Leave your comments below.

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Five Critical Mistakes Small Businesses Make When Hiring an Accountant

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Hiring an Accountant

Hiring an accountant can be a challenge, especially if you’ve never hired an accountant before. There is no “how to” guide on hiring a suitable accountant, and sometimes we can make bad decisions based on poor information. Below are five critical mistakes small businesses regularly make when hiring an accountant. If you’re in the market – or will be in the market in the near future – for an accountant, do your best to avoid making these potentially costly mistakes.

Not Checking Qualifications

Thanks to software programs such as QuickBooks and Turbo Tax, just about anyone can call himself or herself an accountant these days. Because of this, you will want to check the qualifications of your accountant. You can do this by checking with your local accounting association to see if your accountant is a certified member. While being certified is not a necessity, it could raise flags if your accountant says they have a certification and they really don’t.

Not Checking References

Just because someone is an accountant doesn’t mean they are the right accountant for you. Ask for references when hiring an accountant and actually call them. Determine what kind of accountant they were for previous customers and also find out about their character. Some of the best advice you can get on a new hire can be found in former employers.

Hiring Too Soon

Despite the widespread idea that you should hire an accountant as soon as you start a business, there is such thing as hiring too soon. Too soon could mean hiring an accountant before you have the money to pay him. You want to make sure you actually have funds allocated to paying for your accountant because they can’t work for free.

Hiring Too Late

Just like you can hire an accountant too early, you can also hire one too late. Hiring too late means hiring an accountant after you have gotten your business into a heap of trouble and suddenly need someone to pull you out. You should never hire an accountant as an emergency solution.

Hiring For the Wrong Reasons

Believe it or not, there is such thing as hiring an account for the wrong reasons. Some people hire an accountant just because they think it looks good for the company or some other fluffy reason. Your accountant should always bring something of value to the table.

What other mistakes can businesses make as it relates to hiring an accountant? Leave your comments below.

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Do I Need a CPA to Prepare My Taxes?

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When to Hire a CPA

Whether or not you should hire a CPA to prepare your taxes can be a difficult question to answer. In fact, many experts suggest that there can be pros and cons associated with hiring a CPA; weighing these pros and cons is important, but it’s also important to know the time periods and circumstances during which a CPA will be a particularly valuable asset. Here are some good indications that you need to hire a CPA:

When You Own a Business

If you are a business owner of either a small, medium or large business, you may want to consider hiring a CPA to prepare your taxes. Your CPA will help you make sure that you’re not only filing accurately, but that you’re not mixing your personal taxes with your business taxes.

New Home Owner

Are you a new home owner? Your tax filing will probably look much different than it did before you became a home owner. Because of this, you’ll want to make sure if you have a home office you hire someone who knows how to help you get all of your major deductions.

Major Life Changes

Major life changes can be hard to navigate, but they can be even harder to navigate when you’re filing taxes. Major life changes may include, but are not limited to: getting married, losing a job, getting divorced, having a child, getting a new job and a plethora of other things.

Failure to Pay Taxes in the Past

If you have struggled to pay taxes in the past, you may owe lots of back taxes. This cannot be managed alone and you may want to hire a CPA to help you make sure you’re in over your head in IRS debt.

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Why an Accountant Should Prepare Your Taxes

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Accountants & Tax Preparation

Filing taxes can be a super stressful process for anyone’s business―but it doesn’t have to be. In fact, hiring an accountant can be a great way to help relieve some of the stress associated with filing taxes. So no matter what sort of reservations you may have about hiring an accountant, you should seriously consider obtaining an accountant’s assistance if you find yourself in one of the following tax scenarios:

You’re Recently Married

Newly married couples should almost always hire an accountant to prepare taxes. This is because, in most cases, you have probably never had to consider someone else’s income, and by filing your taxes as a married couple for the first time you are more prone to make mistakes if you don’t have any guidance.

You’re Recently Divorced

Much like filing as a newlywed, you will also probably need some assistance to file your taxes as a recently divorced person as well. This can get tricky depending on at what point during the year that you divorced. If you divorced mid-year, that may mean you still have to combine your income with your ex. Having an accountant to help you comb through your taxes can contribute toward you avoiding an audit by the IRS.

You’re Employed in Multiple States

Many people now have the ability to be employed in multiple states. While it can be exciting to work for clients in different states, it can get complicated during tax season. An accountant or a CPA who is certified can help you as you navigate filing taxes in different states.

You Have Lots of Foreign Assets

Do you have lots of foreign assets? You’re not alone; however, this too can be a complicating factor when filing taxes. Look for an accountant or a CPA who knows how to help you report your foreign assets correctly. Having someone inexperienced in this area could not only have you owing back taxes but it could also generate legal troubles.

You’re a Small Business Owner

Small business owners often think that they are the only ones who don’t need an accountant to help with their taxes; however, small businesses should want to make sure that they have all their ducks in a row before their small business grows to insurmountable numbers. Plan now for what you want later.

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How to Hire an Accountant for Your Freelance Business

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Freelancers & Accountants

Hiring an accountant for any business can be challenging, but it is especially challenging for those who run freelance businesses. Here are a few tips on how to hire an accountant for your freelance business:

Check for Previous Work with Freelance Clients

When hiring an accountant, the first thing you will want to do is to check and make sure your accountant has experience with other freelance clients. Because the freelance business is so different from other business models, it’s important that your accountant have enough knowledge of the industry to be able to help you effectively.

Knowledge of Freelance Laws

Does your potential accountant know freelance laws? There are several laws out there that regulate taxes and expenses, and in order for your accountant to be able to effectively help you, they should know the freelance laws to ensure your protection as a freelancer.

Affordable Rates

While most people rave about being a freelancer, it’s not always as glamorous as you may think. In fact, many freelancers literally live paycheck to paycheck. Because of this, you may not be able to afford to spend a lot of money on an accountant. Before hiring an accountant, make sure you discuss with them how much money you have for your budget and be certain that their rate is affordable for you.

Check Their Software

Are you a QuickBooks kind of guy or girl? Or are you more familiar with just a typical excel spreadsheet? Whatever the case may be, make sure your accountant is using software that you can easily navigate through.

Identify Their On-boarding Process

Every accountant should have an on-boarding process for their new clients, especially freelancers who don’t understand why they should hire an accountant to begin with. Making sure your accountant has an on-boarding process not only ensures that you have a great accountant but it also shows that they have proper levels of organizational ability.

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How an Accountant Can Help You Avoid Payroll Fraud

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Payroll Fraud

We have all heard the nightmare stories of people who have had their identities stolen, their tax refunds taken away, and a host of other stories all surrounding fraudulent activity. While sometimes bad things happen to good people and can’t be avoided, there are ways that hiring an accountant can help you when you’re attempting to avoid fraud.

Here are four ways your accountant can help you avoid payroll fraud:

Schedule Frequent Audits

Having an accountant schedule frequent audits for your business is a great way to make sure you avoid payroll fraud in the future.  The more frequently audits are scheduled through the year, the lower your chances of fraud will be. If you really want to make sure that your audits are helpful, consider having your accountant schedule a few surprise audits as well.

Establish Checks and Balances

It doesn’t matter how big or small your organization may be, checks and balances are always important. That’s why it’s even more important to have one specified accountant readily available to help make sure you are setting up new hires, processing payroll and reconciliation throughout the year.

Train Employees How To Look Out For Fraud

One of your greatest assets is your team of employees. In many cases, extreme fraud may not be easily identifiable if you are out of touch with the day to day operation of your business. An accountant can work with you to make sure you train employees how to look out for fraud and even how to stop engaging in unintentional fraudulent behavior.

Encourage Honest Communication

Another great way that an accountant can help your company is by establishing an honest communication system. Many payroll departments have an accountant who sets up an employee hotline that allows employees to not only report fraud but report it without worrying about possible repercussions and retaliations from other employees in your department.

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Three Things Your Accountant Needs To Know About Your Business

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What Your Accountant Needs to Know

When hiring an accountant, you want to make sure you are hiring someone that you are willing to be fully transparent with. If you aren’t fully open and honest when you communicate with your accountant, there’s no way that your accountant can really help your business thrive.

Here are three things your accountant needs to know about your business:

What Your Cash Flow Situation is Like

Your accountant is not supposed to be consumed by your business, but he or she does need to know how much money you have in the bank. Knowing about your cash reserves will help them figure out where you need to go in order to move forward in your business financially.

Your Relationship History With Money

It’s not about where you are now at the present moment; it’s about where you’ve been. Your accountant needs to know what your history with money is like. Have you been known to obsessively spend money in your business? Do you generally get audited by the IRS? Do you lie on your taxes? Whatever your history is, share it with your accountant. The more you share, the more your accountant can help you.

What Financial Goals You Have

Do you have specific financial goals for your business? Share those goals with your accountant. Sharing these financial goals will help you coordinate better with your accountant in order to realize your goals and help take your business to the next level.

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  • Huddleston Tax Accountants / Huddleston Tax CPAs – Redmond, WA
    Certified Public Accountants Focused on Small Business
    8201 164th Ave NE Suite 200 / Redmond WA 98052
    425-483-6600

    Huddleston Tax CPAs & accountants provide tax preparation, tax planning, business coaching,
    QuickBooks consulting, bookkeeping, payroll, offer in compromise debt relief, and business valuation services for small business.

    We serve Tukwila, Auburn, Federal Way. We have a few meeting locations. If you are looking for a Redmond CPA firm, get in touch with us! Call to meet John C. Huddleston, J.D., LL.M., CPA, Lance Hulbert, CPA, Grace Lee-Choi, CPA, Jennifer Zhou, CPA, or Jessica Chisholm, CPA. Member WSCPA.