Working More Effectively with Your CPA

Hopefully by now, your 2011 taxes are a fading memory (or soon will be!). For many small to mid-sized businesses, the annual, looming tax deadline is a daunting one. As a business owner, the added tasks of compiling tax paperwork amidst a multitude of other daily responsibilities equates to added stress.

Many of our clients are CPA firms, and they have shared with us suggestions on how small businesses can work together with their CPA firm to complete taxes less expensively, earlier and more effectively. With a bit of discipline and a commitment to implementing some organizational strategies, next year's 2012 tax season can be far less stressful. Be proactive by incorporating these CPA recommended strategies into your everyday financial practices:

1. Leverage your existing accounting system.
Whether you have an advanced system or a basic accounting system, maximize its capabilities and use them to their fullest potential. Make a commitment to enter expense data on a regular basis. This can be a challenge for business owners who have other, more pressing issues to address, but making data entry a priority is essential to staying organized and helping you keep your finger on the pulse on your company's finances. Even the most robust systems with numerous reporting capabilities require current data to provide you with accurate financial reports. Keep miscellaneous receipts organized and be diligent about expense tracking all year long- not just before tax season. If you find you cannot remain on top of the data entry, evaluate hiring a bookkeeping service to assist with these tasks. Hiring a bookkeeping service or performing the updates yourself is far less expensive than paying your CPA to complete this. And your CPA will be happy if you leave them to focus on their area of expertise- accounting!

2. Maintain detailed records of your invoices, bank statements and financial reports.
Filing key financial documents in an orderly manner will help you locate the necessary paperwork when tax season arrives. Keep detailed records for financial documents including invoices, bank statements, loan paperwork, and financial reports such as income statements and balance sheets. Work to ensure your accounts payable and accounts receivable records stay current so that you have a clear understanding of cash flow. Keeping these records accurate and current allows your CPA to perform his or her duties more efficiently- and less expensively.

3. Analyze financial records for accuracy.
Financial statements should be reviewed regularly for accuracy, and bank statements should be reconciled systematically to ensure data integrity between your accounting system and your bank. This will eliminate any last minute discrepancies that need to be accounted for prior to tax filings. Regular analysis of financial statements will also allow you to stay on top of issues that may arise and provide you with an accurate sense of profitability so that you aren't shocked with a tax bill in April.

4. Know your filing deadlines
Many small business owners are aware of the April 15th deadline, but there are several other key tax deadlines as well. Payroll taxes, W-2s and 1099 contractor forms all require filing and distribution prior to April 15th. Business owners need to adhere to these filing deadlines, as well, to avoid penalties. If you do not have the time or expertise to manage these additional filing deadlines, consider hiring a tax advisor or payroll service to assist you.

5. Keep an ongoing list of questions for your accountant
You know your business best and how it operates. Throughout the year, maintain an active list of questions for your CPA so that you can gain clarification on questions that may arise about your financial operations and their resulting tax implications. An even better option is to meet quarterly with your accountant to review those questions so that you can implement practices during the current calendar year which can positively impact your company's filings.

As a small or mid-sized business owner, implementing these strategies will allow you to partner with your CPA more effectively and make your 2012 tax filing season far less stressful. We are currently offering a free analysis of your business processes and accounting system, which can help you prepare for tax season. If you would like to learn more on how Analytix Solutions can help move your business forward, please call me directly at 781.503.9004 or email me at snpatel@analytixsolutions.com.

Satish Patel, CPA
President, Analytix Solutions
Satish Patel, Founder-CEO of Analytix Solutions, has more than two decades of experience as a CPA. He has also advised small and mid-sized businesses on diverse matters such as valuation, accounting, and finance. His experience extends to raising capital and arranging for finance from angel investors.

OUTSOURCING YOUR BOOKS - The smarter way to save money

The importance of maintaining proper books and accounts is not just to file proper taxes, but essential to check the financial pulse of your business. The survival of your business depends on efficient, timely, well ordered financial reports providing timely updates and alerts on problem areas of business. Correct diagnosis and subsequent remedies depends on identifying the problem and finding right solution at the right time.

Although Bookkeeping and Accounting is not as hard as Rocket Science that would require extremely qualified professionals, it does require necessary skills, analytical ability, and complete concentration to maintain accuracy to avoid serious and expensive problems. This might translate for most of us into being tedious, boring, and time consuming frustrating task. However, this bull needs to be taken by its horns. It’s a necessary evil, which is why services of bookkeeper/accountant/CPA are sought.

But is there a smarter way to tackle your books and accounts?

It may sound noise to some ears, but Outsourcing can really work for even the small businesses too. If it means significant cost savings, you can always argue that it is a default advantage and well touted by all vendors. But there are few other not so obvious benefits too.

It is no secret that large companies have been sub-contracting or outsourcing their non-core functions to expert vendors to take advantage of economies of scale. This option was not readily available to small firms earlier. But economic slump is inducing more and more companies to look at this option. And if you have a local Outsourcing vendor who can provide an on demand one-to-one support, most of your fears regarding Outsourcing can be put to rest.

The obvious advantages of outsourcing accounting, bookkeeping and tax services are::..
· Pay only for reasonable time taken to render services. Rates are generally charged on hourly

basis
· Saves up to 40-50% of operational costs as this does not require infrastructure or related support
· Quick turnaround of work
· 24x7 online access to your books and records
· Flexible and fully scalable modules
· Move towards a paperless office
· Reduces burden of staff and who can then be channelized to other productive activities
· Last but not the least, more time to strategize and concentrate on core functions

The not so obvious benefits of outsourcing are::..
· Access to ‘on demand’ qualified talent
· Access to service and client oriented vendors, since their existence depends on satisfying you.
· Flexibility towards changes and improvements demanded by your growing business which might be difficult to implement with in-house staff who are prone to resisting changes.
· No headache of retaining staff or training newbies. Time saved equals to money saved at the end of the day
· No requirements of any additional capital investment so there is reduction in total investment risk. More opportunities to invest in income generating areas.
· Outsource additional burden during busy time without adding costs of hiring new people.
· Save on add on costs like sick leave, benefits, bonus, promotions, training, house allowances etc without compromising on quality while getting work done faster.

However before jumping the band wagon and enjoying all the fruits from outsourcing, some essential points for consideration:
· Research the vendor thoroughly. Check credentials from other clients, networking and referral sources
· Partner with vendors having ethics and integrity instead of just being cost-oriented
· Vendor must be conversant with bookkeeping and accounting standards of your country
· Check the security and confidentiality policy of the vendor
· Check the quality standards and non-performance penalty clause of vendor
· Check how and where the disputes arising will be resolved
· Check whether your liability insurance covers outsourcing

The decision ultimately depends on business owner’s choice.

Do what is more appropriate for your company and reap long term benefits. The ultimate benefit of outsourcing if done right, leads to significant improvements in efficiency, cost savings and growth in the core functions of the business.