“An initial consultation should occur very early. I don’t think start-ups need to fully figure out their financial reporting and accounting procedures right off the bat, but talking to a CPA can help them get on the right track.”
Taxfyle: How do you learn about specific start-ups when they contact you?
Kate: I first check out their website to figure out what industry they are in, how they are marketing themselves, and what their products and services are. I’ll also check the IRS website to see if there are any new tax regulations for their industry.
T: What is your opinion with separating business expenses versus personal expenses with early start-ups?
K: I frequently see start-ups mix their business expenses with their personal expenses in the beginning. I encourage start-ups to register an EIN through the IRS and then set up a business bank account using that EIN as one of the first steps of starting a business. This gets them off to a good start from a legal standpoint and avoids accounting headaches down the road.
T: At what stage should companies have an initial consultation?
K: An initial consultation should occur very early. I don’t think start-ups need to fully figure out their financial reporting and accounting procedures right off the bat, but talking to a CPA can help them get on the right track. There are a lot of tasks that have to happen in the early phases that can be tricky to navigate for new start-ups, but a CPA makes it easier to set everything up correctly.
T: What are some of the common mistakes start-ups overlook?
K: Many start-ups assume there is a one-size fits all model for their accounting. They’ll assume they have to use QuickBooks, for example. QuickBooks is a great product but there are newer options out there for small businesses to consider as well.
I also see companies wait too long to implement some sort of bookkeeping process, which makes tax time much more difficult when you’re trying to figure out what to report. Start-ups should avoid the ‘shoe-box of receipts’ stage if at all possible.
Kate Williams CPA, World Traveller, Line Dancer, Country Music Lover.
