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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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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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 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 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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  • 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.