I've gone through several bookkeepers, and an office manager. My books are still a mess, tax calculations are shaky, and A/R is weeks behind. Managing the money is a really easy thing for some people but I am mentally incapable of understanding it. I've tried to fix it but I just screw it up worse.
I would love to hand it off to someone who understands the whole enchilada, not just reconciling the bank account. Someone who can tell me if we can spend money, if we are in trouble, if we need more sales. Bookkeepers don't seem to be able to handle it, CPA's are too expensive to run the books. We are a very small shop, it should be simple but it's not.
Shop for a CPA. By shop, I mean don't hire the first one you find. Talk to several, with the goal of finding someone you like and feel like you can talk to. Similar sense of humor (you may need it!), similar interests age, etc. This person will be like a confessor - trust is important.
Do not expect this CPA to do your bookkeeping, but they can recommend one and work with them to get you straightened out and then the CPA can present you with an accurate picture of your company - your true cots, your real cash, your liabilities, etc. Then you can meet a few times a year for tax planning or large purchases of equipment, etc. The CPA can also do all your tax filings and even personal taxes. I rarely spent more than $1200 per year, and I'm clean with the Guv and balanced.
To use a corny shop analogy, a bookkeeper is a programmed robot that will do the specified tasks, but nothing else. The CPA is like the Manager - overseeing the whole, setting goals to be achieved, measuring, nudging, watching and planning.
I suggest you learn to understand your books, soon. Hiring help is one thing, but if you don't understand what is taking place, it will limit you in managing who you hire. The advice from a CPA, or anyone else will not have the same value as when you understand what they are suggesting.
I hated keeping books for years, mostly because I didn't have the knowledge to understand them. I wanted to focus on making money and doing the work, big mistake. After many years, I finally got into managing our books and learned to do my own tax accounting. I have a very good accountant, and would never consider not using him. But now that I understand his language, I can use his advice to the max. I was very pleased when I caught a $4000 mistake his assistant made two years ago on my business taxes. My point is, some time back, I would have simply had to pay the taxes and worked a lot of hours to pay them. A lot more hours than I spent on running my own tax numbers.
I also found when I learned how to understand taxes and book keeping, I stopped going through accountants every year or two.
My CPA cost me 650.00 retainage, 450.00 for bookeeping a month plus payroll, I do all proposals contracts and invoicing. I run my company. He works for Me.
Now before one freaks and says "I could never pay that" We are no longer a "tiny Company" so keep in mind cost is relative, I too hired a in house lady at 600 a week and it was a disaster. I tried to get away from what worked... Well I went back to what I was taught and all is far smoother now.
My Uncle the now well retired amd well respected CPA for most all old companys (Steel, Concrete and Construction) created in our town after WW2 once told me "Never hire a CPA you would not have marry your daughter, He is a partner and he will be your best friend. Mine is !! My Uncle also told me of one Mill owner who sailed in the Millions that he had two drawers one on the right of his desk seat and one on the left. Drawer on right was paper for money coming in, Drawer on left for Invoices and money going out. Ever so often he would bring the drawers to my Uncle who would empty them and take care of the CPA work.
Yesterday My CPA laughed when he came to bet my cardboard boxes because I had now gone to Office depot and purchased those good fold up document boxes instead of the left over shipping boxes I used for So many years..
You are lucky that you have not been embezzled already although you would not know if you had. You need to have systems for invoicing, collection, and payables that you oversee. You should sign all checks. Eventually, a bookkeeper should be able to generate monthly income statements.
if you are a cabinetmaker, you should join Cabinetmakers Association. It is a resource that will help you develop your job into a business that makes money too.
Cash in the bank does not equal profit. That is akin to saying you must have money in the account because you have not run out of checks.
You should know exactly what money you have coming in and exactly what bills you have to pay on a weekly basis for the next four weeks.
Enter payroll taxes as a payable as soon as you deduct them from payroll. Pay them when due ahead of everyone else.
If you take deposits, it is not money to spend EXCEPT for materials and labor for that job. Deposits are a LIABILITY, not an asset - they represent a promise by you to perform.
Not invoicing and collecting per terms means you choose to be the customer's lender.
You would be best served to be able to cost every job to understand if you are making a profit and where it comes from. Failing that, a monthly income statement can help evaluate profitability.
Quarterly or yearly balance sheets prepared and analyzed by an accountant should be used to determine capital and long term decisions in conjunction with the income statements.
I feel fortunate. I can't imagine the trust needed to hire someone to do the "real" accounting. I know enough to do all the grunt work myself. My wife does payroll. But I still have a CPA do my taxes (personal as well) and go to him for occasional advice. Nevertheless, I attended a class on taxes at the last AWFS and as a result my accountant amended three years business and personal taxes (at no charge) and netted me almost $16k. No one is infallible, and I do check the returns and find an occasional mistake. The above mentioned issue was not a "mistake" per se, just an omission of a credit not available to the types of business he usually deals with. My annual accountants' bill usually runs $3500-5000. It seems like a lot to me, but there ain't no way I'm signing a business tax return without a CPA on there as well.
I personally don't consider invoicing to be part of accounting any more than I consider purchasing to be. Of course, they all affect accounting, but you don't need to have a "bookkeeper" to do those tasks as long as you have a basic procedure set up. Part of the basic procedure would be to set up a program such as Quick Books properly so that invoices get posted to the right accounts. Then all you need to do is print the reports (or save a file) for your CPA to review and advise you or do your returns.
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