Today I had my first meeting with a Certified Public Accountant. For those of you who aren't too sure, a CPA is a person who has passed the Uniform Certified Public Accountant Examination whose primary function is to provide assurance services, or public accounting. In addition, they can help with business consulting, financial and estate planning, tax prep, and so on.
I had a financial planner once before who was actually very helpful in educating me about my future relating to retirement and larger purchases in my near future, such as a car and a house. However today, the CPA (let's call him Dave) was pretty much focused on Flynndustries, LLC (my business), and my personal income with regards to taxes—something I am pretty clueless about. Remember, this is a learning process for me and if I tried to know and understand everything before diving into it, I would never have started my business in the first place.
Going in to the Meeting
I didn't really know what to expect, but I did gather a whole lot of information before going into the meeting, which I'm thankful for. If you do ever meet with a CPA for the first time, for your personal or business affairs, I recommend bringing anything and everything you have that relates to your tax filing from the previous and current year, including your W-2s, any 1099s, expense reports, etc. and also any documentation relating to your new business. Dave examined a lot of the documents I brought and it helped him to understand my current situation a little better.
I walked into Dave's office, was guided into a conference room, and sat down only to notice he had a folder with my company name on it with the emails we've been exchanging inside. Sweet.
Important Things I Learned
I won't give you a play-by-play of everything that we discussed, but we did hit some important topics that I would love to tell you about.
For background, Dave understood beforehand that I work from home and run my own business after recently being laid off. I accept payments through paypal from my website which sells an ebook and an audio guide, and I also sell advertising space on my website too. Lastly, I made sure he did his best to educate me about anything and everything possible instead of just telling me to do this or do that.
As a disclaimer, this is my interpretation of what Dave told me, and you should take this advice as you may knowing that it may or may not be the best advice for you and your own situation.
Starting My Own LLC to Protect Myself Was SMART
Dave immediately told me that if I hadn't started my own LLC already, he would have told me to—especially now that I'm getting married and I want to protect my personal assets from any debts my business may happen to incur.
I told him that I was pretty clueless about how to handle money with regards to my business, and so far nothing has changed from before I started my company up until now. Dave said this was okay and meeting with him was the first step in the right direction to make sure my business runs smoothly and financial matters are kept in tact, since I'm a newbie.
First Things First: Keep Your Business and Your Personal Assets Separate
The first thing I must do is separate my business from my personal accounts. Guess what…the IRS requires it. Right now it's all mixed up, which happened because I was running my website as a sole proprietor before starting the business.
I have to open a business checking account, which can be done at any of the nearby banks. Since I received an EIN (employer identification number) from the IRS, which was done automatically for me by LegalZoom [Full disclosure: I earn a commission if you buy through this link.], this shouldn't be too hard.
Any payments I make should be through this checking account, either by writing a check on an online transaction. This will ensure that all money coming out of my business really did come out of my business accounts. Dave advised me that I can make payments for my business using my personal accounts, but I would have to then reimburse myself and literally pay myself back with my company's money. It sounds kinda funny, but this again ensures that all transactions for my business are kept in record on my business accounts, which will help when tax season rolls around.
Any money that I earn from selling anything online, or any payments from eHow or Google must be brought into my business checking account. Right now, it's all in my Paypal account. The Paypal account can still accept payments, but I must forward any income into the business checking account.
Track Everything I Do
An important thing I learned is that as long as I keep track of every major decision I make regarding my business, and every piece of income and expense is kept track of neatly in software such as QuickBooks, I will provide myself with maximum protection.
If I write something on paper and date it, such as a decision to partner with someone, if I were to be audited or sued later on, the fact that it is on paper will help tremendously. If I just say “Oh yeah, we partnered on this date…”, it won't really fly.
Dave also recommended that I get really involved with QuickBooks to track my income and my expenses for the company and also for my personal finances as well. I have to discipline myself to spend a few hours each week to enter transactions into Quickbooks to make sure that I have a record of each and every thing I do. This way, I can make sure I save the maximum amount of money on tax write-offs and also if I ever wanted to sell any part of my business, having easy to read QB files, rather than shoeboxes full of receipts is much more professional.
Dave said this to me:
“Start your company off with good habits. You are the owner, the CEO, and how your company is run from the inside will reflect how it performs on the outside.”
Doing Business As
One last thing I learned in today's meeting was that I can have my own company, Flynndustries, LLC, and have other entities or “projects” that work under it that do business under a different name. For instance, my intheleed.com website is now Flynndustries, LLC “doing business as” intheleed.com. It's still the same company, just a different “face” for a different “project”.
This isn't just said—it must be done formally depending on your state. Here is a helpful website that explains how to do this in the state you are doing business in.
Overall, I was very well pleased with my initial meeting and I told Dave I would love to have him be my CPA for my business and for my family. He mentioned that he was definitely interested to work with me because it excited him that my company is brand new and he wants to help it grow just as much as I do. I will report to you the next time I meet with him if I learn anything new and helpful.
This was a free consultation, and as you can see—I learned quite a bit. Most CPAs will do a free consultation and help you figure out what you're supposed to do or where you may need help and can use their services. I recommend that if you need to straighten out your finances at home, or you just started your own business—to find a CPA or accountant of your own.
I found Dave online after searching for “San Diego CPA” in Google. I read some reviews and heard some good things about Dave, which is why I emailed him for a consultation.
Well, it's the end of the month, which means my monthly reports are coming up. My next post will be my January Income Report, and I'll have another eHow report for you eHow writers too, don't worry.
I also wanted to get into more of the details behind how I automated my business and how I handle purchases, transactions, and delivery of my ebook and audio guide. This will be highlighted in some of the February posts.
Cheers to all!
Are you interested in learning how to structure and start your own business? Check out Chapter 2 of my Epic Guide to Business Fundamentals, which is how to start a business that's built to endure.