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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Five Tips to Help Organize Your Accounting Process

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Organizing Your Accounting Process

Getting your accounting processes in order can be stressful, especially if you’re not a trained accounting professional. Here are five tips to get your accounting process in order.

Divide Your Business and Personal Expenses

Having your business and personal expenses split into separate accounts will not only prevent you from getting confused, it will also bring clarity on when you may or may not have the necessary funds to be able to spend. This also will help you remain protected during tax time so that you are not penalized for things you may do in your business.

Schedule Time to Keep Your Bookkeeping in Order

Block out time in your schedule to make sure you’re bookkeeping is consistently in order. This means making sure that you keep all your documentation in order. Once you have scheduled this time, make sure you check in weekly and consistently to make sure you maintain the order.

Keep Track of Your Invoices

One common misconception is that just because you send out an invoice you automatically get paid. In reality, this is not necessarily true. Sometimes, you will send out 10 invoices and all 10 of them go unpaid. Because of this, it’s important that you and your CPA keep track of your invoices and ensure that you’re not only getting paid but getting paid on time.

Watch Your Labor Costs

Paying yourself and paying your employees are probably going to be your two largest expenses. Keeping track of labor costs will ensure that you’re compensated fairly and that your employees aren’t being overpaid.

Record Your Deposits

Loans, sales and cash transactions can easily slip past your record books. This is why it’s important for you to have conversations with your accountant about the best ways you can record and keep track of your deposits.

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Five Tax Questions Your Should Ask Your Accountant

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Tax Questions for Your Accountant

Tax season can be a very stressful time for many reasons. In most cases, tax season is stressful for business owners because they lack the resources to pay back the money they owe, or because they don’t have their finances in order. Whatever the case may be, tax season should never have to be a stressful time for you or your business partners.

Here are five questions you should ask your accountant so that your stress can be minimized when tax time rolls around:

What Information Should I Hold?

Your accountant will need you to have all of your paperwork and receipts in order to be able to help you fill out your tax information. Making sure you hold on to all pertinent paperwork will ensure that you receive all of the deductions you qualify for.

What Expenses Can I Deduct?

Knowing what expenses you are able to deduct can help you with planning for tax filing every year. In most scenarios, you can deduct money that your business uses on services, office space, professional equipment and so much more.

How Do I Increase My Savings?

Believe it or not, buying certain items can help you save money. Working with your accountant can help you determine what these purchases are and how you can document them to ensure you get the savings you are eligible for.

What is the Difference between Employees & Independent Contractors?

It’s always important to know the difference between an employee and an independent contractor. This is important because it will help you to know not only how to fill out your business tax forms but it will help you when sending out end of year tax forms to either your employees or independent contractors.

How Do I Deduct Household Expenses?

If you are a work from home employee this will be a question which applies to you and your company. Knowing how to deduct household bills plays a key role in helping you save money during tax season. For example, do you have an office inside of your home that is exclusively used for working? That means you can deduct your electricity bill. Little tricks like these are what can save businesses hundreds or even thousands of dollars each year.

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The Benefits of Hiring an Accountant for Tax Preparation

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Accountants & Tax Preparation

Tax preparation is a stressful time not only for individual taxpayers but also businesses. Many businesses spend a great deal of time simply combing through their finances just to ensure that they file taxes correctly. Because of this, many companies opt out of the “do it yourself” method and decide to hire an accountant to help them prepare their taxes so that they don’t have to stress over it. While lowering your stress is a major benefit of hiring an accountant to prepare your taxes, there are several other important benefits as well.

Here is a couple of them:

Navigate Complexity and Minimize Stress

Filing taxes for your business can be complicated and everyone knows that the more complicated your tax situation is, the more you risk making mistakes either out of honest error or simply because you are over-stressed. By leaving tax preparation to experts like an accountant, not only do you alleviate stress, but you avoid having to deal with the complications most often associated with taxes.

Avoid Negative Consequences

One or two bad mistakes on your taxes could cost your company thousands, if not millions, depending on the size of your company. In order to help you stay clear of adverse consequences when filing your taxes, consider hiring an accountant, maybe even just to review the work you’ve already done. Having a tax professional review the work you have put into your taxes may cost you a few dollars up front but could save you a lot of headache and pain later down the road because you caught mistakes before the IRS did.

What are some other ways that hiring an accountant to handle your taxes can benefit you? Leave your comments below.

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Four Assumptions about Accountants Which are Incorrect

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False Assumptions about Accountants

When most people think about accountants, the first thing that often comes to mind is the idea that they are smart, brainy or nerds. While this misleading idea is very common, there are several other things that people often mistakenly associate with accountants.

Below are four incorrect assumptions people often make about accountants:

Accountants Are Always Mathematically Gifted

While being an accountant does require a certain level of proficiency in mathematics, it is a misconception that accountants always like math. It is also a mistake to assume that all accountants are necessarily gifted in math. In point of fact, many accountants report that they actually hate math but just love the science behind pulling numbers and formulas together, and this is more about statistics than it is about pure math.

Accountants Are All Rich

While accounting can be a lucrative career, it does not necessarily mean that all accountants are rich. In many cases, accountants struggle to find work just like any other professional. Where accountants do tend to prosper, however, is in the area of job stability: when accountants are hired by a company, they tend to develop customer loyalty until they die (literally). Accountants are those employees that you hire and hope to never have to let go.

Accountants Are Boring

So are doctors, lawyers, analysts and a host of other professionals. This assumption that accountants are boring is not only incorrect, it’s also an unfair box that we so often put accountants in simply because they spend their days crunching numbers.

Accountants Can Make Your Company Rich

While it may be exciting to believe that all accountants can make your company rich, this is not something which will occur 100% of the time. In fact, an accountant’s ability to make you rich has little to do with them and everything to do with your business model.

What common or uncommon misconceptions have you heard about accountants? Leave your comments below.

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Four Red Flags Your Accountant Can Help You Identify

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Red Flags

Fixing a bad financial situation is something which happens gradually, it doesn’t happen overnight. And the same is true for how bad financial situations get created: every good accountant knows that financial downfalls occur over a period of time, and that there are typically signs which point to the downfall along the way.  This is why it’s important to have an accountant on your team to help you stay alert and take notice of any red flags which my show up within your business accounts.

Here are four red flags your accountant can help you identify:

Bad Spending Habits

When you have lots of money in the bank account it can be easy for you to adopt bad spending habits and not know it. You may spend a few dollars here and a few dollars there and eventually those few dollars can turn into a few hundred or even a few thousands. According to financial experts, most people’s bank accounts are impacted more by small multiple purchases as opposed to one large purchase. Your accountant can play a crucial role in helping you identify those purchases.

Decreasing Funds

If you haven’t grown accustomed to checking your business bank account on a consistent basis you may not immediately realize how quickly your finances can decrease. Having someone responsible for checking your account consistently will not only save you money but help you as you attempt to make more money as well.

Disappearing Money

When you’re first starting a new business it can become easy to have too many hands in the pot. Meaning you have lots of people who have access to your bank accounts, whether it be other employees or co-founders. In order to keep a handle on this, most accountants recommend simply getting rid of your debit cards, and once you do your accountant can more closely watch to make sure your money isn’t disappearing out of your bank account.

Fraudulent Activity

Thanks to modern day technology, fraudulent activity is on the rise and hiring an accountant who is up to speed on fraudulent activities and trends can easily help you identify fraudulent behavior when it occurs or can even stop it before it happens.

What red flags has your accountant helped you recognize? Leave your comments below.

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How Much Should You Pay For a CPA?

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Paying Your CPA

Finding a CPA is one challenge, determining how much you should pay for a CPA is an entirely different story. Paying for a CPA is an issue which can only be settled by considering several variables; here are a few of the most important things you need to think about:

Hourly Rate

The hourly rate of an accountant could range from less than $100 per hour to more than $500 an hour. Sometimes hourly rates can be good, especially when the prices are significantly lower than other CPAs in the market. Beware that just because a CPA charges lower wages doesn’t necessarily mean better services. In fact, higher wages don’t necessarily equate to better services, and that’s why it’s important that you focus less on the cost and more on the service that is being offered.

Proposal Based

Many accountants are kind enough to offer their clients an estimate of what their total cost could be before even doing any services at all. This often helps many businesses because instead of clients being blindsided by fees they weren’t expecting they begin their relationships with their CPAs with a sense of how much they will incur.

Fixed-Fee Structure

For several tasks that are ongoing, such as balancing books, payroll or posting transactions, many CPAs offer their services on a fixed fee structure. Instead of having to pay a large amount of money for these services at one time, you as the business owner are given an opportunity to pay a monthly fee in order to ensure your bookkeeping is properly maintained.

What payment structures have worked for you? Which way do you prefer? Leave your comments below.

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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

    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.