Forums: Discussions for entrepreneurs and small business.

Hello forum,

I am a new member as well as a new “official” small business owner. For the past 5 years I have been a club promoter for several night clubs in my area. Generally I am paid in cash by the club owners or as a part of my take of the entrance fee of any club I promote. Recently I tried to purchase my first home but was denied not because of my credit score which is good, but because of lack of proof of income. Since then, I have incorporated my business in an effort to have more official record keeping about my income.

My question is: Is an accountant really necessary in the beginning? I don’t think my needs are complex but I tend to deal in a lot of cash and need help to make my business income seem as legitimate as possible to banks and the IRS. I have a guy who does my yearly taxes but my question is do I need a consultant type of accountant and not just a tax guy?  Any thoughts?

Many, many business owners do their own bookkeeping. The math involved is rarely complicated, and a basic-level of accounting is certainly something you could learn to do on your own if you wanted to take the time to read an "Accounting/QuickBooks for Dummies" type of book.

It`s really a question of

1. Do you want to do the work? and
2. Would it be more efficient for you to contract it out? (ie, in the time you would save by getting help with it would you be able to earn more than enough money to pay for the accountant`s hours?)

1. If you have been a small business owner for 5 years then you should have "proof of income".  Assuming you operated as a sole proprietor a bank requests a personal financial statement and the last 3 years of tax returns, which would correspond to your reported income on your tax return.  You can do this yourself, but accountant`s do it regularly so it`s usually a lot easier for them to assemble this in a format that is pleasing to a bank.
2. You said you just "incorporated".  If this is the case then there is much more of a need for a balance sheet as well as an income statement, even if you do not have the assets and/or income that requires reporting this information to the IRS, they do expect that you have it.  Again, you can produce this information yourself, but if you`re looking for a bank loan or if you have any "issues" with the IRS you may prefer to have an accountant help you because they know what these people are looking for which is often different than what the basic reports that QuickBooks (or other out of the box software products) can produce.  These software products are great for internal management purposes and routine tax returns, anything else you may wish to hire a professional.
   
3. It shouldn`t matter that you are a cash intensive business.
   

i am a cpa, also a finance charterholder. i have multiple small businesses at the same time.  i could do all the work myself, but i chose not to in the interest of added luxury time and a bit of peace of mind.  i would never hesitate to "outsource" a service that i find ads very little value to my business top line (i see it as admin work) given the cost is reasonable. you don't want to work in your business, you want to work ON your business

A good accountant doesn't cost you money. They save you money and time!