Choosing A CPA And Bookkeeper

[Maddox]

I'm currently using an inexpensive CPA to do the taxes for my small company. And while she is good about answering questions I have, she does not seem very proactive in my business. Basically, she never contacts me. Is this normal for CPAs? I was under the impression that a good one would call you once or twice a year to have a pow-wow about tax strategies and whatnot.

And what should I expect from a bookkeeper who I hire separately? Are they responsible for making sure you write off what you can for your business or is that the job of the CPA?

Lastly, how does pricing figure into each of these services? I'm paying what seems to be the minimum for each service (US-based). But can paying more get me more in some cases?

 

[Gimlet]

Your CPA will not call you for a pow wow. If you want to discuss strategies, that will cost you what ever is your hourly fee (mine rounds to the quarter hour).

You bookkeeper is not responsible for wrote offs, that's your CPA. The bookkeeper is responsible for booking everything that then gets handed off to the CPA, who may then make adjustments for accounting persons, to save you money, depreciation, etc

 

[Papaya]

So you have separate credit / debit card (s) for your business? If not then you should. You can / should link your business accts to account software:

Best Accounting Software For Small Business 2023

Accounting software helps small business owners easily track their financial accounts, income and expenses, prep for tax season and keep tabs on financials. For many small businesses, software is the more affordable alternative to hiring an accountant or a large firm to manage their accounting, tax

www.forbes.com

Ive used Quicken for over 20 years for multiple businesses (one up to to 50 employees before I sold the co) Once its set up and linked to the business bank acct(s) its pretty automatic. (Unless you do a lot of cash transactions) Saves you money on bookkeeping and accounting as its all parsed.

Any intern or trainee can learn/ do basic data entry as part of their job duties

Pro tip: Pay for everything using business accounts. You can always exclude personal expense later if you cant find a way to reconcile it as a business expense.

For example I hold my real estate in a trust that has an LLC as an operations entity. Ive used the LLC account for all travel as I always look at RE no matter where I go. A scuba dive to get a first hand look at local reef health for a potential rental property I was considering in Cayman Islands is a valid business due diligence expense

Finally: No one will ever care about your money as much as you will

 

[TooFineAPoint]

Most accountants are little more than bookkeepers for the state. Many will even believe that paying taxes is a good and necessary thing. Given that belief, how much are they going to help you save? Not much, is the answer.

As a first step, see if you can find an accountant that is a libertarian or at least someone who absolutely despises the state and believes that taxation is theft. That is a nice foundation.

Even then, like the other guys said, they will still hit a point where they simply stop helping you and will proceed to just punch in the numbers. Their main function at that point is to keep up on the byzantine and ever-changing tax laws. Even paying their hourly rate to do brainstorming calls will rarely help beyond that. I guess maybe you can hit an income level where very serious accountants begin to look for you, but I am not at it yet.

To answer your question, the only time my accountant ever contacts me is around tax time to ensure I have sent him all my docs, and then again to show me what forms I have to sign. That is it (unless I book a paid call). He handles both my corporate and personal accounting.

 

[Cynllo]

Finally: No one will ever care about your money as much as you will

My accountant, a Mr. Raj, would beg to differ.

 

[cosine]

So you have separate credit / debit card (s) for your business? If not then you should. You can / should link your business accts to account software:

Best Accounting Software For Small Business 2023

Accounting software helps small business owners easily track their financial accounts, income and expenses, prep for tax season and keep tabs on financials. For many small businesses, software is the more affordable alternative to hiring an accountant or a large firm to manage their accounting, tax

www.forbes.com

Ive used Quicken for over 20 years for multiple businesses (one up to to 50 employees before I sold the co) Once its set up and linked to the business bank acct(s) its pretty automatic. (Unless you do a lot of cash transactions) Saves you money on bookkeeping and accounting as its all parsed.

Any intern or trainee can learn/ do basic data entry as part of their job duties

Pro tip: Pay for everything using business accounts. You can always exclude personal expense later if you cant find a way to reconcile it as a business expense.

For example I hold my real estate in a trust that has an LLC as an operations entity. Ive used the LLC account for all travel as I always look at RE no matter where I go. A scuba dive to get a first hand look at local reef health for a potential rental property I was considering in Cayman Islands is a valid business due diligence expense

I own real estate in a place with world-renowned skiing, climbing, and fishing. Short-term rental guests legitimately book my place to do those activities, and I advertise it as such. I've also been professionally sponsored for climbing. Nothing wrong with going out and finding new places to invest.

Finally: No one will ever care about your money as much as you will

Wise advice.
No surgeon will ever care about your injury as much as you will
No attorney will ever care about your case as much as you will

 

[Maddox]

So you have separate credit / debit card (s) for your business? If not then you should. You can / should link your business accts to account software:

Best Accounting Software For Small Business 2023

Accounting software helps small business owners easily track their financial accounts, income and expenses, prep for tax season and keep tabs on financials. For many small businesses, software is the more affordable alternative to hiring an accountant or a large firm to manage their accounting, tax

www.forbes.com

Ive used Quicken for over 20 years for multiple businesses (one up to to 50 employees before I sold the co) Once its set up and linked to the business bank acct(s) its pretty automatic. (Unless you do a lot of cash transactions) Saves you money on bookkeeping and accounting as its all parsed.

Any intern or trainee can learn/ do basic data entry as part of their job duties

Pro tip: Pay for everything using business accounts. You can always exclude personal expense later if you cant find a way to reconcile it as a business expense.

For example I hold my real estate in a trust that has an LLC as an operations entity. Ive used the LLC account for all travel as I always look at RE no matter where I go. A scuba dive to get a first hand look at local reef health for a potential rental property I was considering in Cayman Islands is a valid business due diligence expense

Finally: No one will ever care about your money as much as you will

Isn't Quicken for personal finances? I would think using Quickbooks for your accounting would be more appropriate for your business.

 

[LothropStoddard]

Most accountants are little more than bookkeepers for the state. Many will even believe that paying taxes is a good and necessary thing. Given that belief, how much are they going to help you save? Not much, is the answer.

As a first step, see if you can find an accountant that is a libertarian or at least someone who absolutely despises the state and believes that taxation is theft. That is a nice foundation.

Even then, like the other guys said, they will still hit a point where they simply stop helping you and will proceed to just punch in the numbers. Their main function at that point is to keep up on the byzantine and ever-changing tax laws. Even paying their hourly rate to do brainstorming calls will rarely help beyond that. I guess maybe you can hit an income level where very serious accountants begin to look for you, but I am not at it yet.

To answer your question, the only time my accountant ever contacts me is around tax time to ensure I have sent him all my docs, and then again to show me what forms I have to sign. That is it (unless I book a paid call). He handles both my corporate and personal accounting.

You know nothing about accountants or accounting if you believe there's anything less than a huge difference between a bookkeeper and a CPA. They're about as similar to each other as lawyer and law clerk.

 

[LothropStoddard]

I'm currently using an inexpensive CPA to do the taxes for my small company. And while she is good about answering questions I have, she does not seem very proactive in my business. Basically, she never contacts me. Is this normal for CPAs? I was under the impression that a good one would call you once or twice a year to have a pow-wow about tax strategies and whatnot.

And what should I expect from a bookkeeper who I hire separately? Are they responsible for making sure you write off what you can for your business or is that the job of the CPA?

Lastly, how does pricing figure into each of these services? I'm paying what seems to be the minimum for each service (US-based). But can paying more get me more in some cases?

Perfectly normal and standard that they are not proactive. If they are, it's either for huge money or because they have too little business (not good). Also, in doing your tax return they will not be creative, take risks or take the time to look for exotic deductions the way you would hope they would. They have time budgets and cookie-cutter models and usually a 22 year old is actually doing the work.

They do the enriching, high-risk stuff for themsleves though. To echo others, they don't care about you, your business and certainly never as much as you will.

 

[Cobra]

I am a CPA; so I will comment.

I had to have 5 years of education before sitting for the exam, which was a total of 14 hours. It covers tax but also goes into business law, economics etc. Then I had to work for a CPA for at least a year before I actually got my license. So, long process and not easy. By the way the pass rate on that exam is very low, possibly lower than even the Bar exam.

Many CPAs do not understand the value they provide. To some extent, that includes me. You are paying for my knowledge and years of education, experience and guidance. I don't give that away for free. Given how many people have taken advantage of it, I definitely have gotten more careful over the years as to how I set up Engagement Letters and agreements.

On that note, unless a client hires me on retainer for the entire year, I don't "check" on them. My time is important and yes, if you would like to pay for that time, I will bust my behind to ensure you get the right answer.

Now let's talk about the right answer. The right answer isn't what you can research and find in the Tax law or even on the Internet. It takes years of education, experience and understanding of common practices to get to the right answer. A bookkeeper cannot do this. To some extent, neither can Enrolled Agents (EAs). EAs can do everything CPAs can insofar as taxes but they do not possess the level of education and experience (combined) that CPAs possess.

Don't get me started on Bookkeepers. There are some excellent ones, but their job is to basically take numbers and put them into buckets. As far as which bucket it goes in and what the tax implications are of those buckets, they typically will not tell you. If they do tell you, I would suggest you not listen to them. I think a good Bookkeeper is a necessity for companies, BUT do not think they are tax experts or even Accountants (who have a degree but may not be CPAs). They are the paralegals of the CPA profession. Nothing more, nothing less.

As far as rates, I am extremely careful on how I price clients. If they pay me a monthly fee, they get a LOT more than if they hire me by the hour. If they buy an hour of my time, I cannot provide the momentum that comes from prior knowledge and files on the client. Retaining a CPA is infinitely better if you are trying to grow a business. I offer S Corporation "packages" to clients who are at that level and carefully walk them through the process to ensure they comply with the tax laws and save tons of money on their taxes.

As far as political views go, I know some of you guys are adamant that the CPA has to be conservative in their politics. That's fine but that's not how our profession works. Trying to "find" a libertarian or conservative is a horrible idea. You need to find a CPA that will save you the most money on your taxes and understands the tax law on paper and in practice. Experience matters 50x more than politics.

Do with this what you will. I'll pop in here and there and am happy to offer general advice and directional advice for free if I find the time.

 

[Maddox]

I am a CPA; so I will comment.

I had to have 5 years of education before sitting for the exam, which was a total of 14 hours. It covers tax but also goes into business law, economics etc. Then I had to work for a CPA for at least a year before I actually got my license. So, long process and not easy. By the way the pass rate on that exam is very low, possibly lower than even the Bar exam.

Many CPAs do not understand the value they provide. To some extent, that includes me. You are paying for my knowledge and years of education, experience and guidance. I don't give that away for free. Given how many people have taken advantage of it, I definitely have gotten more careful over the years as to how I set up Engagement Letters and agreements.

On that note, unless a client hires me on retainer for the entire year, I don't "check" on them. My time is important and yes, if you would like to pay for that time, I will bust my behind to ensure you get the right answer.

Now let's talk about the right answer. The right answer isn't what you can research and find in the Tax law or even on the Internet. It takes years of education, experience and understanding of common practices to get to the right answer. A bookkeeper cannot do this. To some extent, neither can Enrolled Agents (EAs). EAs can do everything CPAs can insofar as taxes but they do not possess the level of education and experience (combined) that CPAs possess.

Don't get me started on Bookkeepers. There are some excellent ones, but their job is to basically take numbers and put them into buckets. As far as which bucket it goes in and what the tax implications are of those buckets, they typically will not tell you. If they do tell you, I would suggest you not listen to them. I think a good Bookkeeper is a necessity for companies, BUT do not think they are tax experts or even Accountants (who have a degree but may not be CPAs). They are the paralegals of the CPA profession. Nothing more, nothing less.

As far as rates, I am extremely careful on how I price clients. If they pay me a monthly fee, they get a LOT more than if they hire me by the hour. If they buy an hour of my time, I cannot provide the momentum that comes from prior knowledge and files on the client. Retaining a CPA is infinitely better if you are trying to grow a business. I offer S Corporation "packages" to clients who are at that level and carefully walk them through the process to ensure they comply with the tax laws and save tons of money on their taxes.

As far as political views go, I know some of you guys are adamant that the CPA has to be conservative in their politics. That's fine but that's not how our profession works. Trying to "find" a libertarian or conservative is a horrible idea. You need to find a CPA that will save you the most money on your taxes and understands the tax law on paper and in practice. Experience matters 50x more than politics.

Do with this what you will. I'll pop in here and there and am happy to offer general advice and directional advice for free if I find the time.

If I run a small company where I have no employees and just a few clients, do I still need a bookkeeper? Or is it wiser to save the money and teach myself Quickbooks to do my own bookkeeping?

 

[Cobra]

If I run a small company where I have no employees and just a few clients, do I still need a bookkeeper? Or is it wiser to save the money and teach myself Quickbooks to do my own bookkeeping?

It's hard to tell what you mean by small, but if it's under $50k in revenue, sure. Above that you need to start exploring better tax structure depending on the industry.

That said, you can do it yourself if you're savvy enough about the basics of taxes in your state. I mean the very basics, such as your tax rate, estimated taxes, any business taxes, sales taxes etc. If you are not savvy, or don't want to be, then consult a CPA.

A consultation with a CPA that's been on the business for a few years wouldn't hurt. It could be the best few hundred dollars you spend. I recommend someone local who you can go in and see. Not just a phone call.