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Accounting
Accountants can help owners clear hurdles
The process of starting a business means wearing many
hats and doing a lot of detail work. Government regulations,
risk management and daily business transactions aren't
the reason you got into business in the first place,
but they're a necessary evil. The good news is that there's
help available from experts in accounting who know what
hurdles you'll face and how to clear them. After all,
a certified public accountant - especially one with experience
in your industry - has faced similar challenges with
other clients.
That experience can help you prepare for challenges.
Starting a company requires flexibility and contingency
plans, and an accountant can help you understand some
of the possible outcomes. This preparation will be especially
helpful when you seek financing. Loan officers will want
to see several business outcome scenarios and how you
plan to deal with them.
If possible, find an accounting firm with a local presence.
Chances are you'll spend time in their office, and they'll
spend some time at yours. Another important consideration
is the types of services the firm offers. Beyond the
basic compliance services such as tax preparation and
financial advice, it helps if the firm can provide consulting
services, such as helping develop a business plan, assisting
with financial projections and working with the owner
to raise capital.
An accountant can help you decide how to develop and
market your products within a reasonable cost structure.
Accountants will also help with estimating costs such
as office space, travel and distribution expenses. And,
of course, an accountant will be a valuable asset when
looking at the tax implications of doing business.
All the planning and forecasting will not prepare you
for the emotional ups and downs you can expect once you
are on your own. Having a professional to help navigate
the terrain will help you stick with it. Entrepreneurs
know that startups are risky, and you'll need an unbiased
opinion when making decisions. Think of the accounting
firm as a member of your management team.
There are some key decisions that an accountant can
help you make. Choosing the best structure for your business,
for example. Each type of business entity has different
characteristics, and you should be advised on which one
best suits your business. There are three key questions
to ask when choosing a business structure:
• How many owners will your business have and what classes
of ownership will they have? The types of ownership include
common, preferred, general, limited active and inactive.
Most refer to the type of stock owners hold or how involved
in the business they will be.
• How do you want the liability of the business structured?
Will you be personally liable for the business or do
you want to be shielded from liability?
• How do you want to pay your taxes? Certain entities
treat profits as though they are the owner's income.
Other types have corporate income taxed once and then
the distribution of the dividends is taxed a second time.
The challenge is to find an entity that offers the best
balance between limiting your personal liability and
offering you the best tax advantage.
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