Forums: Discussions for entrepreneurs and small business.

For those of you have started your business, do you think it`s wise to use the same accountant for you business as you do your personal finances?  How should I approach this?

Thanks in advance

My first thought, of course, is why not?

This is someone you already obviously trust or they wouldn`t be handling your personal finances.  Why would you need a different person to handle your business?

Is there a problem with your existing relationship?  Some reason why you wouldn`t want the same person taking care of everything?

 

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CrossCountry,

Thanks for replying.  Our existing relationship is fine and I do trust him as my accountant.  I just wanted some advice as to if I should separate business and personal.

Very glad to hear the relationship is good. 

There will be times when your personal finances will overlap into the business and vice-versa.  You`ll need someone who can tell the difference.

Most startups begin by using their personal accounts for business expenditures but, at some point, you`ll want to keep them separate ~ your existing accountant/bookkeeper should recognize and be able to questions new types of expenses almost immediately.

I think you`re on the right track.  Best of luck in your new venture.

 

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In my opinion, I think you would be safer to have separate accountants for your personal income and your business income (unless you are sole proprietor).  I used to work for a tax accountant and he had many clients for whom he did both their personal and business tax filings.

After 2 years, I found that he was concealing some of his clients business income and filing slightly false tax reports because he didn`t throughly analyze their financial records.  He opened up his clients to more risk.  If his clients had separate accountants for their personal finances and their business finances, then one accountant would be able to provide oversight on the other (and vice versa). Using a larger accounting firm would probably also minimize the risk. 

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Hello!  I`m a CPA who specializes in taxes and unless you are a sole proprietor or a disregarded entity (single member LLC), then you don`t have to use the same accountant for both your personal and business taxes.

The first reason why I think you should use the same accountant for both is because most tax planning techniques require knowledge of both your personal and business situation.  If neither accountant knows your whole picture they may either offer no advice (the most common) or poor advice.

I have never heard nor experienced the situation that KarelG described above and honestly do not think that having two separate accountant`s would have helped that situation.  If I were to prepare a C-Corporation return, there is no reason for me to ask any information of any of the owner`s; thus, if one of the owners had an accountant who "didn`t throughly analyze their financial records" I wouldn`t know it or suspect it.  If I were to prepare an individual tax return of a person who was also the owner of a C-Corporation, there would be no reason for me to ask any information of the C-Corporation (other than if I believed the W-2 which was issued was incorrect); thus, if the owner happened to select an accountant who did not "throughly analyze their financial records" I wouldn`t know it or suspect it.

In actuality, unless the client asks for and pays for an "analysis of their financial records" they will rarely get it.  This is not something that is normally done, nor required, in connection with a tax return preparation engagement.

KarelG stated, "I found that he was concealing some of his clients business income and filing slightly false tax reports".  If this was in fact true, then the best way to find it is to have your returns reviewed by another accountant.

The important thing to remember is that YOU are responsible for your return, so you want it prepared correctly.  If it is not prepared correctly, and the IRS (or state department) audits you, it`s your audit and your liability.



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Gina L. Gwozdz, CPA
http://GLGcpa.com
http://TaxTreasures.com

I have a question?  If a vehicle is paid for by a corporation, is it OK to pay the DMV registration out of the  company`s money.  Or should it be paid out of a personal account.

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LISA

I have another question for any that would like to answer.  A friend of mine wants to move all of his business operations from one office to another.  They are currently using the CFO of another company to get all of their stuff done for taxes at tax time and I believe that this CFO keeps track of what is going on pertaining to bank charges that happen to come through and  that this person does other stuff a CFO would do which I am kind of in the dark about.  If this company decided to discontinue using this other companies CFO how much work would be required by someone else if they were to take care of her job.  And would it be just as easy to just have the current accountant take over any responsibilities that the CFO is handling at the present time.    There is already a person that is taking care of the accounts payable,  and that person is also  keeping track of the accounts receivables, as far as keeping track of what is coming in to the bank and going out. The CFO currently balances the bank statement.  Could`nt an accounting firm do this for a company for a minimal charge.  I know this  sounds a bit confusing but if anyone could give me an opinion I would appreciate it.  

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LISA

When you said the "vehicle is paid for by a corporation" I assume this means the corporation holds the title to the vehicle, if so then yes the corporation can and should pay all expenses relating to the asset (vehicle) that they own.


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Gina L. Gwozdz, CPA
http://GLGcpa.com
http://TaxTreasures.com

The short answer is yes.  Most accounting firms will do this service as well as prepare the tax returns.  For many businesses they do not need a full time bookkeeper; thus they save money by hiring their accountant to do this type of work for them (reconciling bank statements, reconciling general ledger, completing internal financial statement, etc.).


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Gina L. Gwozdz, CPA
http://GLGcpa.com
http://TaxTreasures.com