Small Business Accountant
Posted Thursday, January 26, 2023
The strongest reason for using a small business accountant is- you do what you do best with your time. Let us do what we do best with ours. Sure, you can trot down to BestBuy and buy the latest and greatest of QuickBooks. Or better yet launch a new QuickBooks Online account. But the negative effects of that move can be insidious.
First, QuickBooks makes everyone feel like an accountant. Accounting is a profession, not a hobby, and it extends way beyond reconciling a checkbook. Far too often we hear, “what do you mean my books aren’t in good order? I don’t understand. All my accounts are reconciled!”
What we know about business owners is that they are great at making widgets and are not bad on reconciling a checkbook, but are typically lousy at accounting. Phantom income from invoices. Negative balance sheet accounts from incorrect payroll entries. Missed tax deductions from improper coding. We could go on and on like a Journey song.
No biggie, but most business owners are smart, do-it-yourself types who really need to let go and focus on the widgets.
Second, WCG is a CPA firm who provides accounting, payroll, tax preparation and small business consultation. Our approach to accounting, which we define as bookkeeping + analysis, is-
- to help you understand how your business is performing,
- to compare your business to your peers (competitors),
- to provide accurate tax planning, and
- to minimize your tax burden.
Keep in mind too that banks, lenders and IRS agents prefer a set of accounting records and financials that have been prepared by a small business accountant with the involvement of a Certified Public Accountant. Remember, these professionals review financial records every day, and they can quickly spot accidental inconsistencies and errors.
Most importantly, would you rather be closing your next sale, BBQing on a Sunday with buddies, or getting sucked into the world of accounting at the hands of your latest QuickBooks purchase? Focus on growing your business, and your small business CPA will focus on analyzing the data for operational considerations and reporting it to the IRS while minimizing the tax consequence.
Bookkeeping Accountant Pricing Model
We have three starting points-
- $500 per month for monthly accounting, or
- $250 per month for bi-monthly, or
- $175 per month for quad-monthly (three times a year).
Both starting points assume two bank accounts (such as one checking and one credit card) and fewer than 250 transactions per month. Do really count each transaction? No, but we have to start somewhere.
Bi-Monthly Value Option
WCG is a leader in finding value for our clients, and as such we have introduced the unique bi-monthly cadence for reconciliations and financial statements. For some business owners, this works perfectly since they still get data frequently for operational considerations and the “where am I spending my money” question, but at lower fee. Frankly, going from 12 deliverables to 6 allows you, the busy business owner, to focus more on the impact of each set of financial statements and not be distracted by noise created simply because of frequency.
Quad-Monthly (every 4 months or 3 times a year) is designed for that small business owner who doesn’t rely on their financial statements to assess the health of their business or need them for periodic business reviews including advanced tax planning. They are more interested in taking chores off their plate, recording all valid tax deductions and being prepared quickly for an early business tax return.
Quad-Monthly (every 4 months or 3 times a year) and Annual accounting services are available for the super low activity situation. A single-family residential long-term rental comes to mind. Conversely, the 8-unit commercial building with lots coming and going likely needs at least bi-monthly accounting to stay on top of things.
We only support QuickBooks Online. The huge benefit of QBO is that you can see your data in real time from your computer or mobile device. However, you will only be allowed read-only access since we need to maintain 100% custody of the financial data if we have an Accounting Services engagement; in other words, you cannot directly help. What does all this get you?
WCG will provide the following basic accounting services (see Accounting Add-Ons below)-
- Monthly bank reconciliation.
- Recording payroll journal entries and other recurring entries (such as depreciation or loan interest for accurate tax planning).
- Detailed list of outstanding reconciliation items for your review and clarification.
- Financial statement presentation delivered by the 25th of the following month for management / internal use only.
- One on one analysis of financial statements with you (accounting = bookkeeping + analysis).
What if your square peg doesn’t fit our $500 or $300 round hole above? No biggie… we can customize a fee that makes sense to you. Over 80% of our small business owners pay less than $550 per month for accounting. An account here and a few more transactions there doesn’t dramatically compound your accounting services fee.
It’s a crummy deal, but our accounting service fees do not include the QBO subscription fee. Historically, Intuit offered massive discounts to accounting and CPA firms so there was a real advantage for WCG to pay the QBO subscription fee and then pass those savings onto you. However, around November of 2021, Intuit changed the pricing grid and the measly discounts don’t represent enough of a savings for the hassles of WCG paying the subscription fee directly.
So what next? If you are engaging with us for accounting services, and you need to establish a QBO subscription, we collect payment information on your behalf, and set up billing and payment directly with Intuit. Piece of cake!
We can bundle all sort of things together. Our Business Advisory Service plans typically include corporate tax preparation, individual tax preparation, shareholder payroll processing, routine consultation and tax planning. We can easily add accounting services and employee payroll to our plans. Just ask!
Our accounting services are limited. We do not provide invoicing, accounts receivable monitoring and collection, paying invoices or accounts payable accruals. Bookkeeping will generally be done on a cash-basis (if accrual-basis bookkeeping is required then more discussion is necessary).
Our accounting services cannot be relied on to disclose errors, irregularities, or illegal acts, including fraud or embezzlement, that might exist. However, we will inform the appropriate level of management specifically designated by you, of any material errors that come to our attention and any irregularities or illegal acts that come to our attention, unless they are clearly inconsequential.
In addition, we are not providing what our industry considers compilations, reviews or audits. These are terms of art and they have very specific meaning. As such, we must be clear that our Accounting Services engagement is not providing assurance services, and that we are not engaged to prepare compiled, reviewed or audited Financial Statements. No auditor’s or accountant’s reported will be prepared or submitted to you.
Foreign Disclosure of Accounting Services Information
WCG utilizes KMK Ventures Private Limited, a tax and accounting company in India with over 15 years of experience and 225 professionals including Chartered Accountants, to assist us with our accounting services. Many well-known and highly visible accounting firms have been offshoring tax return preparation and accounting services for more than two decades.
We realize that identity protection and security is top of mind for everyone; WCG is following the accounting industry’s best practices including IRS compliance directives to safeguard your data. Fortunately, there are excellent resources and guidelines from the hundreds of CPA firms that have done this before us.
We have an experienced CPA and in-house trainer who leads the KMK team and is primarily charged with training and quality control. All accounting work will be reviewed, modified as necessary and reviewed again by our team of “stateside” Accounting Managers and Supervisors prior to delivery.
Please review our Accounting Services Engagement Agreement.
We just reviewed the basic accounting services above… but accounting can also have several offshoots and complexity. Let’s run through some of the most common ones-
Most small business owners are cash based (versus accrual). The IRS code recently changed allowing more taxpayers to be cash based, and it has even expanded some of the hybrid methods. If you need accrual based accounting for whatever reason (better tax position in the near future, required by your franchisor or investors, etc.) this adds time to the accounting service.
This is not common in most service-oriented businesses, but even dentists, eye doctors and veterinarians (just to name a few) have a retail angle to their practices. And boom, they also have a sales tax obligation which can vary between monthly, quarterly and annually depending on the volume.
WCG does not offer sales tax services for online retailers such as Amazon merchants, FBA merchants, etc. It is way too complicated… and while we could be good at it, there are others who already are. Our recommendation is taxjar.com.
Personal Property Tax
Many counties want you to pay a tax not only on your real estate but also on your personal property (like equipment and furnishings) that are deployed in your business. Don’t get hung up on the word personal… it basically means non-real estate property.
Having an inventory can add complexity to your accounting services. How often are you counting inventory? Do you need to count at all (ie, you have lot numbers or you are exempted by tax code)? How are we valuating the inventory (FIFO, LIFO, weighted average cost)? What is the most appropriate cost (market, original purchase price, etc.)? Ok… we really beat the heck out of that stuff.
Sorry… one more thing… do you have direct labor or depreciation built into your cost of goods sold? Ok, now we’re done with this.
Industry Specific Issues
Certain industries have their own nuances. Construction sees a lot of job costing where certain expenses are allocated to be a part of the project cost and are capitalized. Retail sees a lot of cash, theft and inventory adjustments. Construction contractors, such as electrical, HVAC and plumbing, usually want to split their world into sales and service, and track revenue and expenses separately. Attorneys have trust accounts and goofy 1099s that need special handling.
Time billing systems (attorney), patient billing systems (doctors), point of sale systems (retail or restaurant) and a zillion other operations-oriented software applications all claim to interface with QuickBooks. Generally they do. But they can also create a big mess… as an attorney, do you want to pay taxes on uncollected revenue less expenses (what we can accrual based accounting) or pay taxes on cash received less expenses (cash based accounting)?
What we are saying here is that software integrations must be carefully monitored for phantom revenue and other downright stupid things.
Alternatively, and commonly, we don’t let the software and QuickBooks directly talk to each other. Instead, we take reports or other data dumps, synthesize that into something that makes sense, and then make adjusting entries in QuickBooks.
Some franchises are basic… you pay a few bucks, and get to use their name and their processes. Others are super overbearing. It is not necessarily the franchisor’s fault… they might be required, either contractually or the Federal Trade Commission, to present consolidated financial statements of all their franchises, and therefore you must report transactions in a certain fashion for compliance. In other words, the franchisor supplies the Chart of Accounts, and determines where things go, the accounting method and how often reporting must be performed.
This isn’t a super huge deal, but when you start piling on 401k plans, disability, insurance and other benefits platforms, they create extra time during payroll entries. You pay your staff on Friday. On the same day, we must book the obligations for all the payroll stuff although you might be cash based as an accounting method… this is just to make the journal entry from the payroll activity tie out. Then we need to make sure these payables are cleared when paid. Again, not a huge deal, but certainly more complexity.
Financial Statements Analysis
Accounting is more than memorializing transactions for a small business. It is the analysis and business consultation based on the information that allows owners to manage his or her business. WCG will analyze financial statements to look for obvious misstatements and errors. This includes-
- Common-size (vertical) analysis where categories are compared to revenue.
- Year over year, or period over period (horizontal) analysis where categories are compared to themselves over time.
- Analyzing the data for tax savings and operational opportunities.
There are two questions we want to answer. What does a financial statement mean to you? And how can you use it get more out of your business?
Additionally, one of our concerns with financial statements and accounting records that are not prepared by a CPA firm is that you might not be getting all the tax deductions you are entitled to.
Industry Statistics, Comparisons
Statistical comparisons and trend analysis is a service we provide to each owner to identify action items and areas needing improvement. We can leverage Fathom reporting and First Research to provide baseline data for your industry or peer group. How do you compare to yourself in previous months or years, and how do you compare to others in the same business? For example, for restaurants factoring the impact of cost of goods sold, labor and rent on business profits, the variations can be dramatic. We will work with you to keep more of your money as you continue to develop your business.
Anyone can crunch numbers. But we crunch numbers and tell you what they mean, plus offer business consultation and coaching to create a successful future.
Not ready for someone else to do your bookkeeping, but you need some help get going? We have introduced our QuickStart program to get you on the right track right away. This has been super popular with our new business owners.
Our QuickStart fee is $750 and includes-
- Set-up QBO
- Chart of Accounts
- Linking bank accounts
- Company legal info in QuickBooks (Address, EIN, etc.)
- Training to show the basics of how to use QBO (typically 90 minutes)
- How to create invoice
- How to apply a payment
- How to code bank feed transactions
- How to match transactions
- How to reconcile bank and credit card accounts
- How to create adjusting journal entries for external payroll data, tax return data, etc.
- How to change system configuration
- Answer any questions during the session
- Three scheduled “training” sessions of general support and answering “how to” questions regarding QBO (super fun!)
QuickStart does not include payroll setup within QuickBooks.
WCG offers payroll services in a variety of forms and function, and we tailor a system that is custom to your needs. Anyone can set up the withholding accounts and run payroll- a quick warning however. If you think the IRS is crazy about income taxes, they are insanely fanatical about timely and proper payroll taxes. Fines and penalties can jump up right quick if payroll is messed up. And, payroll never sleeps! Click on the button below to learn more-
Small Business Accountant Consultation
Do you have more questions about how this works? Not sure what a small business CPA does? Do you have questions about your own accounting and financial records? Not sure what is tax deductible? Let’s chat!
WCG is a full service tax consultation and business advisory firm focusing on small business accountant services.