As 2008 draws to a close, business owners have more on their mind than the holidays. Taxes and tax planning need to be given some thought before you ring in the new year. Early December is a good time to get accounting caught up and make some projections for the remainder of the year. If a business is new and does not have an accountant, now is a good time to find one. Your accountant can make recommendations on whether to purchase that new piece of equipment you want now or wait until January. Your accountant can also make suggestions on maximizing your expenses.
It is not too late for your accountant to do some tax planning for 2008. If you have not made any estimated tax payments, your accountant can determine if you need to make one or not and save you from paying unnecessary penalties and interest in 2009. Another reason to hire or touch base with your accountant now has to do with payroll.
If you prepare your own payroll tax reports throughout the year, you should consider having your accountant handle the fourth quarter payroll reports and W-2s. A lot of IRS and state tax notices can be avoided if steps are taken to make sure all the wages and taxes reported throughout the year tie into the final reports. Most business owners rely on software to generate the reports and put full trust that what has been printed from the software is correct. Unfortunately, that is not always the case and software is generally not dynamic enough to flag potential errors. In the long run, it can provide peace of mind and save money and many needless hours responding to notices if a professional processes your payroll reports at year end.
Allowing your accountant to get involved well before the taxes are due is always a wise decision. You will save money (and who doesn’t want to save money in this economy) and you will be able to have some quality time with your accountant before tax season makes that nearly impossible. I encourage you to contact your accountant or find a new accountant now before the year ends so you can leverage your budgeted accounting dollars for maximum use.
Choosing the best accounting software for your business can be a challenge with all the choices available today. Some software is industry-specific and quite costly. Other software packages promise to have you up and running in minutes without any bookkeeping or accounting experience necessary. Your accountant is generally the best resource to help you choose the software that will suit you and your business needs.
I have worked with both expensive industry-specific and out of the box accounting software. Both types of software have something in common—you should get an accounting professional to do the initial set up to ensure proper reporting of your financial information. Your accountant should also be able to train you how to use your software correctly and be a resource should you have specific or unique questions regarding how to enter a transaction.
QuickBooks, Peachtree, and Microsoft Money are the most popular out of the box accounting packages for small businesses. They are easy to use and set up. The problem I encounter the most is a lack of understanding of basic accounting principles and this often results in extra time to correct my client books at year end. In the long run, a client will save more money if they will engage my services in the beginning for setup and training. I also like to review the books a few times during the course of the year to ensure there are no incorrect transactions being booked on an ongoing basis. This process makes for a far less painful year-end for both my client and me.
Industry-specific software is generally far more expensive and more complex. Most reputable companies include setup and consulting as part of the front-end cost. I have found that manufacturing, construction, and non-profit type businesses generally should use industry-specific software. The reporting and information capabilities are more suitable than the cookie cutter options of out of the box software. For example, QuickBooks offers manufacturing, contractor, and even non-profit editions; however, the setup may require add-on programs, customized reports and heavy accountant involvement to provide the necessary information for management use. A cost comparison may reveal that you would have been better off purchasing a more expensive program initially.
I have been a QuickBooks Advisor in the past and I am an advocate of this program. I like the ease of use for my clients. Training time tends to be minimal and it is user-friendly software. QuickBooks has a great Simple Start program that is free to use within certain restrictive parameters. This is a great way for a client to try out the program and get a feel for it. A very small business may even decide to stay with the Simple Start program because it suits their needs perfectly.
Get a professional opinion on what is the best software for your needs. Spend the extra money initially to get the software setup and training and you will see the dividend pay-out at year end when you give your accountant a good financial package that requires very little clean up before your tax return can be completed.