5 Reasons Why Your Startup Needs an Accountant

4/30/2024 - By Casadi Shepherd, CPA

You’ve finally settled on your startup idea and you’re ready to share your passion with the world… but getting an accountant before your startup officially takes off can greatly benefit your company in the short and long term. Check out the top 5 reasons why YOU need an accountant for your startup:

1. Business Structure

Determining what type of business structure and incorporating documents can depend on how many partners or shareholders there are, the type of day-to-day organizations, salary and retirement plans for employees and future visions for the business. One important decision includes deciding what type of status to file with the Internal Revenue Service when applying for an employee identification number and with the State Department. An accountant can help you set up your business from the start or help you file forms to make changes to your business organization.

2. Maintaining Financial Records

Once your business gets rolling, you must now keep track of all the income and expenses. QuickBooks Online is a great program to assist business owners in keeping track of their books. An accountant can provide consulting services on how to use the program in the most beneficial way for your business needs. Accountants can also help determine what type of financial recording method is most appropriate, accrual, cash or other. Maintaining accurate financial records is crucial for financial planning and funding from investors or lenders. An accountant can help on a monthly, quarterly or annual basis to help reconcile books based on transaction volume and business needs. This can help you maximize your time with the business operations while we help behind the scenes.

3. Financial Planning

An accountant can assist with financial planning, helping the business plan the cash flow for future tax liabilities. Having a clean record of books will increase the accuracy of the quarterly planning. Your financial method and type of business, as discussed above, can greatly affect the end-of-year tax adjustments. An accountant can help provide quarterly vouchers at a corporate or individual level to avoid any penalties or interest in tax return filing.

4. Business Taxes

Compliance with annual tax return filings is crucial in operating a business, especially as you grow across county and state lines. Businesses must determine whether they should be collecting county taxes and at what rate, or whether your business has nexus and should register or file a tax return in a state. Each state may have additions or subtractions from the federal taxable income. An accountant can help advise on correct procedures when expanding into a new area.

5. Maximizing Returns

Your federal taxable income can vary from the book income. An accountant can help you determine which expense may be nondeductible or how to accelerate equipment expenses to reduce the current year's tax liability. An accountant can help you plan big purchases based on any tax law changes or sunsets. They can also help ensure you are maximizing all expenses including home office deductions, expensing and capitalizing startup costs, and travel expenses. Depending on the business structure, an accountant can help maximize the deductions taken at a personal level as well such as the 199A Qualified Business Income deduction.

Overall, your initial business decisions can have a profound impact on later financial and tax planning. An accountant can help you start off on the right foot, give you ease of mind and keep you moving forward.

To learn more about how an accountant can benefit your business, check out our Tax Services. Ready to get an accountant for your startup? Reach out to our Tax team for more information!

About the Author | Casadi Shepherd, CPA

Casadi is a senior in the Tax & Accounting Services practice of Saltmarsh, Cleaveland & Gund. She provides a variety of tax preparation and accounting service for high-net-worth individuals, corporations and non-profits. She began her career in public accounting in 2018, providing tax and consulting services for individual, partnership and corporate clients.