Do you have a lot of questions?
That's good.
Here are answers to frequently asked questions.
Do I really need bookkeeping services? Yes. You know that pesky tax return thing you have to file every year? To accurately file that, you must know how much money you bring in, how many expenses you have, and what's left over. That's called profit. The government collects their share of the profit through income taxes. It's important to ensure your transactions are accurately classified because the government doesn't appreciate when you understate your profit resulting in not paying enough taxes. On the flip side you don't appreciate your profit being overstated causing you to pay too much in taxes. A bookkeeper helps you maintain accurate financial records. So do yourself a favor. Hire a bookkeeper so you can feel confident your profit is accurate. A bookkeeper can help set up payroll if you have employees. Maybe you made an S election and need to run payroll. Bookkeepers know how to make it happen. Additionally, most products and some services are subject to sales tax. The rules are different in each state and can be complicated. A bookkeeper can help you with this service.
What is monthly bookkeeping? Bookkeeping is categorizing all money in and money out, often referred to as classifying transactions. It can be done weekly, monthly, quarterly, or yearly. Best practice is monthly at a minimum. Why monthly? Having accurate and timely data is crucial for making financial decisions based on fact, not assumptions. When looking at your numbers regularly you become proactive instead of reactive. You don't want to be the business owner who thinks they have an idea of their profit but then at the end of the year have a rude awakening. When you engage in my monthly bookkeeping, you will get reports delivered to your inbox by the 15th of each month.
Should my business be formed as a Sole Proprietor, LLC , or S Corp? Let's first define the three: Sole Proprietor - An unincorporated business owned by an individual in which there is no distinction between the owner and the business. LLC - business structure that is filed with a state in which the business is a separate entity than the owner. S Corp - an entity which elects to be taxed as a corporation. The entity must first be formed as an LLC. A big benefit to being a Sole Proprietor is the ease of forming it. This type of business essentially doesn't require anything besides business activity to be considered a Sole Proprietor. The disadvantage is the lack of protection. Anyone that does business with you can sue you for any reason and can take your personal assets such as your house, car, bank account, or even your retirement. The benefit of having an LLC is the protection it provides. If a client decides to sue you, they can only go after your business assets and not personal assets. Forming an LLC does require filing it with the state, but this is a fairly simple process. Electing to be taxed as an S Corp is very beneficial once profiting a certain amount. This election can save you thousands in taxes once you are at a certain profit level. Generally speaking, if you are profiting at least $50K you should be talking with a CPA about the benefits of making this election.
What is the difference between tax preparation and bookkeeping? Tax Preparation Services: A tax professional will request your financial books and other supporting documents to report what occurred in your finances to the IRS and state during the past year. Tax professionals specialize in tax law compliance. Bookkeeping Services: This entails categorizing income and expenses, reconciling all accounts to ensure accuracy and completeness, and printing financial reports to analyze the health of your business. Bookkeeping is more detailed than tax preparation. It provides you with a clear view of your finances, catches errors, and allows you to be stress free when its time to hand over your books for tax prep. No more stressing for hours on end compiling every crumpled receipt you can find. In Summary, you need both bookkeeping and tax preparation as they are separate services that work complimentary to each other.
Can you file my taxes too? No. We prepare your financial bookkeeping documents so that a tax pro can easily file your taxes. Having both a bookkeeper and tax accountant is beneficial. You'll have two sets of eyes on your numbers. A bookkeeper keeps your numbers in order and helps you understand them.