Ask The Experts Chia-Li Chien: What Should You Expect From Your CPA?
by Chia-Li Chien | June 06, 2012
|Questions From||Sam on Thursday, May 17, 2012 at 8:48 AM|
|In business since||2008|
|Industry||Professional Service – Software developer|
|Average Annual Revenue||$500K to $1MM|
|Question:||My consulting business has one major Fortune 100 client and is in the process of expanding additional consulting contracts with them. My business currently has about 25% net profit and I pay on a quarterly estimated tax schedule.
I was surprised that my CPA did not file my 2011 LLC (with S. Corp. election) tax return nor file the extension. We are now behind on the filing, including personal taxes. In 2010, we downsized our home and were surprised there were additional taxes we had to pay plus penalty as a result of this.
My CPA’s office has given me what I would consider poor customer service. For example, they don’t respond to us within 1 to 2 business days. Even an email response would be acceptable if they could just tell me they’re working on a solution. Sometimes, I don’t get any response at all. They are not proactive in addressing our tax issues. There was no tax review conducted last year to help us avoid this and other tax issues in the current year.
My top 5 challenges in my business are:
1) Finding the right people to service my contract while continuing to expand my business. I want to setup a structure to add employees or contractors.
2) Being proactive about upcoming taxes due and avoiding penalties.
3) I use QuickBooks™, but need help in setting it up properly to accommodate business expansion.
4) I have a retirement plan in my business using a SEP. I want to maximize my retirement savings and save on regular basis instead of once a year.
5) Avoiding surprises—like unexpected taxes!
|Answer From||Chia-Li Chien on Thursday, May 17, 2012 at 3:06 PM|
Congratulations on being in the top 30% of privately-head businesses in the U.S. I am so very proud of you!!
C. Decision Making: Based on your historical data and your compliance reports, a CFO (Chief Financial Officer) can then help you as the owner review, analyze, and recommend necessary actions to keep your business in the right strategic direction. Activities may include:
|Recommended Actions||Your number one priority right now is to file your 2011 LLC entity tax return right away and pay the penalty. This includes your 2011 personal tax return.
Structure your business on a scalable business platform to help expand and grow your business beyond just you. That will help create wealth for you and your business.
Get your accounting setup in QuickBooks online for the ease of record keeping and review at http://quickbooksonline.intuit.com. This ensures you and your accounting team have access to your accounting data at all times.
Have a comprehensive personal financial plan and business financial plan completed early in the year. This will help you maximize your retirement savings in both qualified (limited amount based on regulation) and non-qualified (not limited). In addition, this will help you strategically run your business to grow in value, not just in revenue. A qualified advice-fee only CFP (Certified Financial Planner) and experienced CFO in your industry can help you establish such plans. Your biggest asset now is your business and you must have a dual approach to your business and personal financial plans.
As part of the financial plan, you will then engage your CPA for monthly and quarterly reviews, which will address your tax concerns proactively, as well as your personal long-term financial wellbeing.
From a practical business purpose, you should diversify your client base. A proper business financial plan can address this both short and long term.
File your LLC annual report with the Secretary of State (typically it is early in the year) and in most states, you can file and pay online.
Have an annual meeting for your LLC during the last quarter of the year. Otherwise, you will lose the credibility as an entity and its intended purpose. At the end of the annual meeting you will provide corporate meeting minutes. You can buy a template from an attorney’s office or online at legalzoom.com.
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About Chia-Li Chien
Chia-Li Chien, CFP®, CRPC, PMP; Chia-Li “like JOLLY!” She is chief strategist of Value Growth Institute dedicated to creating business value that transforms your world. Chia-Li is also a Midas Advisor to MidasNation, a community dedicated to helping private business owners increase the value of their firms. She is the award-winning author of Show Me The Money and faculty member of American Management Association. Her blog and newsletter was named a top small business resource by the New York Times “You’re the Boss” blog. To book Chia-Li for a workshop, keynote, or strategy session click here or http://vgi168.com/bookjolly. To book Chia-Li for consultation click here or http://vgi168.com/counsel.