Are you considering taking the entrepreneurial plunge and starting your own business? Congratulations on taking this exciting step towards realizing your dreams! As you embark on this journey, it’s essential to establish a solid foundation, and that begins with keeping accurate and organized records. In this article, we’ll guide you through the key records to maintain before engaging a Certified Public Accountant (CPA), and when the right time is to bring in their expertise.

The Foundation: Essential Records for New Business Owners

Before you even think about crunching numbers or calculating profits, you need to set up a strong record-keeping system. Properly maintained records not only facilitate your day-to-day operations but also pave the way for a seamless collaboration with your CPA down the road. Here’s a breakdown of the vital records to maintain:

  1. Business Transactions: Keep a detailed record of all your business transactions, including sales, expenses, purchases, and payments. These records will be the backbone of your financial statements and tax returns.
  2. Receipts and Invoices: Maintain copies of all receipts and invoices related to your business activities. This helps you track expenses, confirm payments, and supports any potential tax deductions.
  3. Bank Statements: Regularly review and organize your bank statements. These documents provide a clear overview of your financial inflows and outflows, making it easier to reconcile your accounts.
  4. Employee and Payroll Records: If you have employees, keep thorough records of their wages, benefits, taxes withheld, and any other relevant information.
  5. Inventory Records: For businesses dealing with physical products, detailed inventory records are a must. This ensures accurate accounting and helps in managing stock levels effectively.
  6. Contracts and Agreements: Maintain copies of all contracts, agreements, and legal documents related to your business. These records can help in resolving disputes and ensuring compliance.
  7. Tax Documents: Collect and organize tax-related documents, such as W-9 forms from contractors, 1099 forms, and other records relevant to your tax obligations.

When to Engage a CPA: Timing is Key

As your business gains momentum, you might wonder when it’s the right time to bring in a CPA. While every business’s situation is unique, there are some key milestones that signal it’s time to engage a professional:

  1. Business Formation: Right from the start, a CPA can guide you through choosing the appropriate legal structure (sole proprietorship, LLC, corporation, etc.) for your business. This decision has long-term implications on taxes and liability, making expert advice invaluable.
  2. Before Tax Season: Don’t wait until the last minute to find a CPA. Engaging one before the tax season allows them to review your records, suggest potential deductions, and ensure everything is in order to prevent any last-minute rush.
  3. Growing Pains: If your business is experiencing rapid growth, it’s an ideal time to bring in a CPA. They can help you navigate the financial complexities of expansion and strategize for sustainable growth.
  4. Complex Transactions: When you’re about to make significant financial decisions like acquiring another business, selling assets, or seeking investment, a CPA can provide invaluable insights to ensure these transactions are financially sound.
  5. Audits and Compliance: If your business gets audited or faces compliance challenges, a CPA can be your lifeline. They’ll assist you in preparing the necessary documents and representing your interests during the process.
  6. Financial Planning: As your business matures, a CPA can assist with long-term financial planning, retirement strategies, and succession planning, ensuring your business remains financially healthy even after you step back.

Guiding Your Business’s Financial Future

Starting a business is an exciting endeavor, but it requires careful planning and meticulous record keeping. Maintaining comprehensive records not only sets the stage for a successful collaboration with a CPA but also helps you gain a clear understanding of your business’s financial health.

Grapp Lerash is a full-service CPA firm headquartered in Saginaw, Michigan.  At Grapp Lerash, we deeply understand the entrepreneurial journey and the foundation necessary to achieve dreams.  Our approach focuses on asking the right questions, investigating each unique scenario, and discovering solutions that work.  We deliver our service through an impactful, solutions-based approach that centers around collaboration and connecting our clients with the right people at the right time.  Let’s talk – see how we are accounting, done differently.