Lessons

Lesson Info

Your First Outsource: Accounting: On–Location

I'm here with my accountant cody martin and cody and I have just been working together for a few months I finally hired someone who I felt could really help my business move forward but I wanted to give you guys a little perspective on what it it takes to find a good accountant and why you need one I think cody's like the perfect guy so thanks for it's my pleasure thank you for saying so yeah so cody talked about your background first just to kind of get an idea of where you're coming from but I went to school in oregon state and then started kpmg in portland doing federal tax work there and then some individual but mainly corporate partnership taxation had an opportunity to move home to bend, oregon so I did um and have been patrick casing company ever since I became a partner there a couple of years ago primarily what we focus on is business tax returns probably sixty percent of what we do in the other forty percent the individuals that fall out of the business is for the tax transit...

we prepare certainly concentration on actual tax work but a lot of tax planning a lot of business consultation more than more than just processing tax returns yeah, I have to say you're totally qualified in a numbers guy and you've given me a huge sense of there's something there's something calming about like turning that kind of thing over to somebody who is an expert. It really is, but a lot of businesses starting out. I remember when I did, I had no idea where to turn, what to do. I really need to count it. Can I just do my taxes on my own? What's the difference between a good bookkeeper, an accountant, when you're a small business owner, like wading through all this stuff is really overwhelming. Where do you suggest someone start in this meth of numbers? So, really good question. And I think it's, really pretty important for, for even a small is a small business owners to start seeking professional help. It's very common that the taxpayers jump into a business don't want to pay the professional fees so they get two or three or four, five years down the road and then realize there's a lot that they could have done to help structure where they are and where they want to go and help help from taxation saving perspective than in business business, respective struggling, you know, structure in a manner that assist you going forward. Um, so, you know, I think it's pretty important that whether the initial contacts of sepa or an attorney making making a contact in the professional world that khun then help you go from there is a good way to think about it yeah, it'll cost you some money now for those professional services but you'll make that money up tenfold by spending that now is not a safe assumption. Yes, and I think it's I think it's really important that when seeking professional assistance that you find good professional assistance because because you know, a lot of people process tax turns and a lot of people can formal caesar or incorporate your business or whatever the case may be but finding finding somebody that's willing to take that extra step to say no from us startup business perspective these are the things that we need to be taking a look at furman accounting perspective we can't suggest legal entity, but we can work with your attorney to make sure that you understand the tax consequences of a single member l c versus a s corporation how that all feet together and you know, the tax implications of of making that decision on as artists might right brain. So here going well, can you talk in english? No it's just it's my ignorance really? But I mean when someone is and I just struggled with this a few months ago before I found you, but as artists we feel like our business is a little different than most, you know, because we don't have like an inventory that we're selling were we're selling more of a service on we're selling us as creative how do we find an accountant where do you look to find somebody who can help you with that kind of business really good question I think I think really important to just start asking questions asking questions of your peers and colleagues asking asking people outside of your profession and who were they working with you do they have good relations with their accountants and attorneys talking other business owners saying why do you use them? You know, just starting to get a feel for it and you can go through the yellow pages or that you know, go through online google on dh get, um decent recommendations but I think it's pretty important that people ask questions and and they're very proactive and seeking that professional assistance okay, so I have I have a two part question so if I'm new to my business and I'm not making a lot of income, the instinct of me is going to say you don't need to do that right now you don't make enough money you know that's kind I'm not I'm not big potatoes yet I need to wait that's gonna be my first instinct is that a bad instinct? First of all? Yes okay and why is that? Well, because there are so many opportunities to set up the business you know, in the right right manner to start with if you don't if you don't take advantage of those probably missing potentially huge opportunities to structure how your business is going to go and you know if if you're if you're if you determine that that all you're gonna do is just a little hobby business it's you know you're you're gross revenues you're a few thousand dollars a year maybe not quite as important, but if if the goal is to be, you know, grow and be successful and have a thriving business it's going to cost you a little bit up front but there are so many things that a good c p a in a good attorney can do this the business getting started and it's anything from, you know, making sure that they understand sitting up there they're quick books and keeping accounting on a regular basis they know the ends and ends announced the business too, you know, capitalizing depreciating equipment to negotiating leases I mean, the list goes on and on and earlier I'm just a few questions ago you talked about, you know, asking questions to find an accountant I don't even know how to find account how do I know what questions to ask? What should I be asking really good question and for those that have no idea what they're asking, I think, you know, talking to people that they're around and saying what are you looking for in a c p e you know why do you why do you think trust the person you work with andi and then taking a step back and I think it's okay to go out there and read about a little bit what should I be looking for in a sepia um and, you know, start asking those questions I wish I could tell you like there's one thing that you have to focus on that the gamma nus so wide I mean there's there's somebody things to consider e think just jumping into the process is important place to start I think it's also somewhat person I mean you're a service business too it's somewhat relationship worrying it I mean money is such an intimate part of who we are as human beings and when I'm going to spill my entire financial picture in business onto the table and say evaluate it I have to trust tio I have toe like you it's a there is some kind of relationship involves, so imagine those air questions and just feeling it out it's go absolutely you know one of the things that we do and and you went through the process every time we meet with a new client, we sit down and have a no feet no no obligation first interview and it's kind of making sure we understand what each other's needs are you understanding my mic cost structure what what your expectations are and you know accounting is more than just numbers it is certainly you know, the accountant in the the attorney and the professional people in the business is that you deal with um it has to be relationship it really does what I found to be so relieving was that kind of I got your back feeling like, you know, now I have you I have my attorney I've got this team of people who are really experts in their field who and this is a story this is last year that I did this, but I finally feel like I can breathe like they'll take care of that and it's a it's a really nice spot to be in the added it cost me money it's totally gonna cost me money but there's a point where business where it becomes worth it but you're saying, do that at the beginning and then you're gonna have even more buildup of asset in that department as time goes by and once again it's it's more than just number of conscience more than just filing your tax return but it's, you know if you're working with a good accountant, making sure they're helping you understand your business and your balance sheet knew your income statement and what are those things telling you, teo, you know if if what are they telling you on a monthly basis? I think sometimes as artists we feel foolish because that's not our strong suit and we feel like we should know what those numbers are but we don't and it's like we don't want to admit to anybody that we don't have that financial picture clear, but I mean, I think it's maybe we should just, like, let that guard down and realize you deal with this all the time, right? Oh, absolutely and I think it's really important for us all realize world good at what we do for a reason and we can't be good at everything, there's nothing about me that has artist, you know, strand in my body, but the county thing, the business thing, I understand pretty well, you know, feeding off of each other's strengths is a pretty important thing else on that call, okay? So, you know, I have having in account, but what kind of book keeper do for a business there's a difference, right? There is a absolutely a difference, so so I think tax preparer epa eyes kind of more high level they're preparing the dax turns there there talking about the next business asked you buy that's going to help grow your business they're you know they're working with you in a business consultation perspective a bookkeeper's literally going into the details of your checking account in your credit card in the reconcile in every month making sure that your records are in one spot a lot of times I would say most of our small businesses use quickbooks there's other programs out there they're zero there's you know just quick and there's there's a ton of different accounting software is but making sure that all those records are put in a format so the accountant can help you understand where your businesses and you could you could do that stuff yourself like it's probably important out sort of thing you can and I think it goes back to the idea of understand what your strengths and weaknesses are yeah if you if that's not something that's higher on your priority list or something that you don't understand start working with the bookkeeper and you know, sometimes we see the transition for small business owners to slowly take that over because they understand mohr and they want to do it other folks determinants and that's something that they never wanted they don't ever ever want to reconcile thank you can't s o hundred understanding that and working with professionals that can help it's pretty important so what about the businesses who are kind of getting to a point where they're making a good income they're pulling a salary it's consistent they have a steady stream of clientele they really feel like a viable business what? First of all, tell me what the differences between the different types of entities, you know, you could be a cell proprietorship, you could be an llc, you're going to be an escort, but I know you're not an attorney, so I'd like you speak with it more just from an accounting standpoint, but when is the time when you should really start examining what those different entities can do for you? And how do you go about finding that information? Really good question? And and once again is the simplest grocer I'm not attorney energy selection has to be made with an attorney because there's a lot of legal ramifications to go along with that, but from attacks perspective, you know, understanding having a basic understanding before even started the business, I think it's pretty important, if you decide that you want to be a single member, l see kind of the same things the sole proprietor report on your individual income tax return so you don't have additional income tax filings, oftentimes attacks, depending on how it's structured, I might have more exposure to so security and medicare tax employment, so self employment tax, you know, and a lot of times we see small business to start there because the cost of entry is so small, it's a good first step from from there, it's new the determination do I do? I am going to bring other partners in. Do I make it a multi member? I'll see. Does it make sense to maybe incorporate as as an s corporation there's some potential tax savings there, but but having a general understanding of that before you even start is pretty important because the effects of it are are long term. Yeah, and from my understanding, um it's, really, the move from sole proprietorship is going to really protect your personal assets? Is that is that basically what it comes down to? Yeah, a lot of times attorneys will move, move people that are you know the hobbies schedules see business soaper brighter to at least a single member I'll see from income tax perspective there's no difference it's both reported on a schedule c, which flows through directly to your in form ten forty from a legal liability perspective. If all the other elements were put in place a lot of times it's it's set up to limit business liability from personal assets. Yeah, and I can see when there's a point in your career when that would be a really comforting thing to dio at least that's what the way it was for me? Absolutely and, you know, the cost of entry of a single member elsie is so minimal if anybody fills it that this is something they're going to do besides taking taking a few photos once or twice a month, I think it's something that they should consider because the benefits of it are pretty significant from particularly from illegal liability perspective. And what about, you know, for people who are going to do their accounting on there, or they're not there counting their bookkeeping on their own? You mentioned a couple software's is there? Wait, should you go for one or the other? Is one more popular than the other? You have any recommendations or any thoughts on that? I think for years and years and years, people of these quickbooks because it's the most recognized name as technology, comes along and gets better there's other programs like zero and probably others that I'm not even aware of. They're they're integrating more online features so they automatically download credit card statements and bank statements. Yeah, there there's significant vantage, however, you still have to understand those functions and how it works, because if you don't, the records are still going to be a mess. So you understand what what you're capable of and what your needs are is pretty important. Once again a little homework, you know, starting off online, doing a little research and then starting to ask questions maybe even taking a class you know that I know that there's local quickbooks classes all over the place that give you an inch or two how do I get started? Okay, so let's, step out and kind of look at this from forty thousand feet up from the big picture standpoint as a business owner at what point should I consider getting an accountant like what point in my business should I really say? Ok, it's time it's time to hire somebody, right? Really? I think it is dependent on everyone's, individual circumstances and unfortunately, the truth that matters costs always going to be consideration it's very easy to to start off and say this is really small it's not worth it, but you know that the sooner the sooner you khun develop that relationship, the better off you're gonna be on dh we've talked about it a little bit before bit so important that, um, you establish that early if you think your business again and grow for only the income tax perspective has been making sure you know you're saying have retirement plans and you're capitalizing fixed assets and you having the debt discussions and effects on the, you know, income, taxes and how old that fits together pretty important to start. Oh, yeah, I think the hardest thing is is that especially for artist money is a lot like being on a diet way don't really wanna like, we don't really want to accept reality of how many calories we're consuming, you know, it's one of those things where but the minute we do, we feel so good about her are about our financial picture, we feel like we're going in a specific direction, even though it may be really hard to see it first, it gives you a plan and a big picture view of what the future looks like. Would you agree with that whole big, big time? And I think, you know, for those of us that manage your own businesses, you generally have a pretty good sense of how things were going, but but there is not a winning one to admit it or not. There's there's always maur this story on dh that's. Why? If you put your quickbooks or your accounting system in place and you're learning what your financial statements are telling you, there's so much information derived from that people oftentimes don't have a gut feeling for you know they're they're thinking about taking out a fifty thousand dollar alone, but you're taking a look at cash flow on a monthly basis from from analyzing their financial records, they realize maybe I shouldn't do that, or maybe maybe we hold off on it for a year or two till I can cash floater, you know, there's there's a lot of there's, a lot of decisions that could be made a lot of information that that's to be had. If you understand what your financial statements are telling you and I got accountant is going to be able to see you analyze that where your money is coming from, where it's going and and why it is going there. Right? Having having those discussions, I think it is incredibly important for between that the accountant and in the small business owner well, let's, just kind of wrap up here and talk overall once again, big picture, I find it really when it comes down to finding someone like you it's doing a little pounding the pavement it is, it isn't finding people your people, people. I find it quite odd that going through the process of interviewing an accountant or interviewing attorney, but but I think I think that's absolutely the best way to approach is it, from my perspective is an interview from both sides. You know, if I have a taxpayer that comes in and they want to, they want to disregard the tax rules, and they want it. You get away with everything, they're not gonna be the right fit for our firm and vice verse if if a taxpayer comes in hurt and things they want to do it right but isn't isn't willing to pay attention there business it doesn't really care there's not a whole lot that I can do however somebody comes in and they really have an interest in doing it right they don't they understand they don't know what they don't know to me that's what that becomes a lot of fun and I think it needs to be the same same process for for the small business owner is this person gonna bring the right tools? That table and some of it's some of its just luck? I mean you don't he'll always know what you're looking for, but I'm asking the questions and being engaged in the process I think is a really good way to start as we have this conversation here it's so interesting to me because you know, I educate photographers on running their businesses and we're in a completely different industries yet the principle still hope hold true not everyone is your client and you want to pair yourself with people who are really going to elevate your brand in your business to the best that it can be and I think having a good accountant is going to give us peace of mind it's going to get yes it kind of stinks to do it initially it's like a little being full, but in the long run, the confidence you receive, the comfort you receive and the the knowing that there's a team behind you that you're paying to be there, yes, that cost you money, but I think there's enormous advantage to that advantages to that long term, and can you just kind of wrap up? What ultimately, those benefits are for someone just starting? Absolutely, you know, we like to consider ourselves value at it firm in that we're not just processing tax returns, and I think for small business owners that really want to, you know, take their business to the next level. That's a pretty important thing to be looking for the reason the reason that we consider ourselves value added firm is, is that were, you know, not not just pretty numbers on forms, but we're we're having the discussions of are you understanding your financial statements? And we're having discussions of do you understand what your debt load is? And you know, the idea of reducing that before you buy the next asset, having discussions of, you know, are you considering retirement plans and the the taxpayer potential tax savings of starting to fund those, you know, there's a lot of different conversations that happened in that, but pretty important to have this conversation, is there anything else you wanna add? Cuddy. Did I forget to ask anything? I think you've covered it pretty well, you know, as a small business owner, that the bank is just really important to remember that, that, you know, finding an accountant an attorney's is finding finding that professional relationship and work hard to find the right people, because the right people can help you a lot. Thank you so much. No time, and you're absolutely it's been a pleasure. It's been wonderful to talk to you, and you've done it. You've given us a ton of information that I know a lot of people will use. Thank you, thanks for having me.