Get a Fucking Accountant (and an Attorney)
Tax day is around the corner and once again Twitter is littered with advice on deductions and ways to “save” money on your taxes. As the owner of multiple corporations, allow me to offer the only amount of advice that matters: get an accountant.
As in, Certified Public Accountant and while you’re at, you should have an attorney, too.
In the beginning
If you’ve already created a corporation, you should already have both. I hear a lot of people often suggest, that you don’t need either and you can just fill out the paperwork yourself. Don’t. It’s a stupid idea and you can tell whatever friend/know-it-all/website that recommended it that I said it was a stupid idea.
There’s a place for saving money in your business, but the legal document that founds your company in the eyes of the government is no such place. Have an attorney do it and rest peacefully knowing you’re never a lawsuit away from losing everything you (and your family) own.
Second, you should consult an accountant for which tax entity you should use for your business. Picking the wrong entity can cost you a lot of money in unnecessary taxes. But accountants are also consultants. The good ones help you plan out the next year and can offer the best ways to finance purchases. You shouldn’t just speak to your accountant on April 15th; they should be your first call/email/twitter/whatever before you make any investment or major capital purchase. Same applies whenever you create a new type of revenue stream for the company. When you’re young and still small, consider your accountant as the first CFO of your company.
Pay your Taxes
As I allude above, your accountant is not just for taxes, but tax preparations are a big part of the yearly interaction. If this is your first business, you’ve probably had your head filled with all of these mysterious, unknown deductions that “can save you THOUSANDS” on your taxes. Be skeptical anytime there appears a mysterious way to cut your taxes in half. The first rule of business is that every dollar is hard-earned.
You’re in the big leagues now. Gone are the days of 1040EZ forms. If you underpay your taxes as a business the IRS will catch up with you. It’s dangerous to think “well, it worked last year…” because the IRS can go back 7 years to find a smoking gun. And when they do, you’ll pay hefty interest. So, instead of thinking of your accountant as a way to game the system, think of them as a protective measure. In the long term, the conservative approach is more prudent.
How Do I Pick One?
Getting sued or audited are the two worst nightmares of any business owner, and for good reason. Your best friends during these situations are your accountant and your attorney, so choose someone you can trust. It helps if they have experience or understand the field of business you operate.
One of your usual methods of discovery as a geek, the internet search, often is no good. As a rule, CPAs and attorneys tend to stay away from the web, given the regulations and laws surrounding their official advice. (Did you know that conversations with your CPA are privileged, the same as conversations with your attorney?) So in lieu of a blind search, talk to your friends, go to a local developer meetup or even your parents. Chances are someone near you has first-hand experience with at least one accountant or attorney.
And since he’s my brother, I’d be remiss not to recommend my corporate attorney of choice. Jonathan Rhyne, while neither as handsome or intelligent as I, is a damn good business attorney. In addition to running the legal department of MartianCraft, he’s also a nerd.
CPAs are a little harder to recommend because they have to be licensed in the state you are incorporated, but if you’re looking for a Virginia accountant get in touch with me and I’ll send you his way.
Go Smart or Go Home
It’s no secret that using the services of an accountant and attorney costs money. It’s the cost of doing business well. Put another way: you’re an indie, you don’t have time to worry about this.
If you are not incorporated, if you don’t have an accountant and if you don’t have an attorney to call, your business is in danger.