In a prior post on the topic of Launching a Consulting Business we began covering the necessary (but boring) stuff that must be in place (i.e., legal, accounting, insurance, etc.) to properly manage the business and mitigate the inherent risks.
As mentioned, an overall theme here is recognizing that there must be separation between your personal and business affairs.
We will now cover the next topic…
Accounting and Finance
I went into business for myself to deliver services, NOT to keep my own books or to prepare tax-related documentation. And, if you’ve decided to form a corporation there is a required set of financial reports that will need to be created on a monthly and annual basis.
Shortly after forming my business I found a very good CPA (certified public accountant) firm that I’d highly recommend: Appletree Business Services. If you contact them, tell them I sent you.
One of the first things they said, which really struck me, was: “Our job is to keep you out of jail.” Well, I thought, I’m glad somebody will be doing that 🙂
How many of us have heard about, what seems to be, lucrative tax-saving strategies? And, being cost-conscious, we give serious consideration to these “schemes.” Whenever I hear of a business (or personal) tax strategy that seems lucrative I call my CPA at Appletree Business Services. After a quick conversation they’ll clearly let me know when:
- It is a viable and legal strategy (let’s do it!)
- They’ve heard of others doing it, but reinforce that if audited it could create some sticky situations (i.e., if you do it, you may not sleep well at night – worrying)
- This is not a viable or legal strategy (don’t do it!)
My approach is to “push the envelope” and leverage every strategy available to me: only when it is 100% legal and viable. That is, my overarching guideline is: I want to be able to sleep well at night.
I won’t go into other details related to what my CPA firm does. Because, once engaged, you are on “auto-pilot” and all these affairs are, well, simply put – covered! I love that!
That said, there is one other accounting and finance-related matter to mention.
You must have a separate / business bank account so that you don’t inter-mingle personal vs. business finances. And, it is suggested that you select a bank that makes it easy to do EVERYTHING online (be green / avoid paper).
For example, once your business grows beyond you, as the single resource delivering services, you’ll want to be able to pay any subcontractors and/or employees via ACH transfer (NO PAPER CHECKS). This offers many advantages:
- Saves time vs. writing checks and placing in the snailmail box
- Your team-members receive their money directly in their accounts within 3 business days (less if absolutely required, for a fee)
- It is green…Did I mention: NO PAPER!
In a future post we’ll continue covering the “boring stuff” that must be in place (i.e., insurance, etc.) to properly manage the business and mitigate the inherent risks.
DISCLOSURE: I am not qualified to provide legal, accounting or insurance-related advice. What I am suggesting here is: you must get some!