Lagerquist Accounting Blog
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Recent Blog Articles
How an Outsourced CFO Can Help You Establish Accounting Practices To Minimize Risk and Maximize Profit
An outsourced CFO can provide your small business with the accounting services and financial management advice you need to successfully navigate from your break-even point, so you can maximize profits and boost ROI.Read more
Leveraging the Expertise of an Accounting and Advisory Firm to Support and Optimize Your Accounting System
This fourth article in our series outlines the benefits of partnering with an external advisory firm in optimizing your business finances. We look at the comprehensive services offered by outsourced accounting specialists and how they can support your in-house teams and processes toward ideal results throughout the work year. Bookkeeping is an essential aspect of […]Read more
Your Accounting and Advisory Firm Can Help You Avoid These 5 Major Pitfalls
Lagerquist’s third part of an in-depth blog series explores how partnering with a reliable external accounting and advisory firm can help your company avoid five of the biggest pitfalls faced by businesses. External accounting specialists provide extensive real-world experience that help companies navigate the most significant financial challenges with minimal guesswork.Read more
Seven Startup Business Suggestions That Your CPA Wants You to Know About
Posted by Sylvia Lagerquist, CPA
Are you excited to launch a new business? Eager to begin establishing a new enterprise? Then take a wise step and consider these seven startup business suggestions that your CPA wants you to know about as you take the first steps toward success:
1. Developing a Forecast
You need to think carefully about forecasting revenues. Some entrepreneurs just put a straight line going up, while others assume little to no revenue in the early days. It’s not uncommon for a business to take one to three years to break even, but you should be in a position to secure new sales early on.
2. Choosing a Launch Date
Choosing the date when you formally establish the new venture is not a trivial concern. You can deduct up to $5,000 in startup costs during your company’s first year in business, but costs beyond that are amoritzed over 15 years in most cases.
3. Planning for Business Formation
Selecting the structure and format of your company is another important matter. For example, many entrepreneurs love the flexibility and protections afforded by the Limited Liability Corporation (LLC). On the other hand, LLCs have specific requirements and limitations on how members (i.e. owners) are configured, so it’s important to align your plan for any investors or co-owners with the entity strategy you select.
4. The Entrepreneur’s Role in the Business
You can’t just decide what you plan to do for your business without considering the relationship between your role and the structure of the business. For example, if your business is established as an S corp. (or an LLC operating with S election) under the IRS code, and you work for the business in an active professional capacity, then you must pay yourself a reasonable and appropriate wage for the services rendered. Every option or approach has different tax, benefit and personal implications.
5. Classification of Expenses
In order to develop a meaningful budget, you need to begin classifying intended expenses. And that means having clearly defined categories that can be used for strategic planning and financial/tax planning as well. Your CPA can advise you on how to develop a Chart of Accounts that will work for both ends.
6. Budgeting for All Costs
Starting a business is a complex process and both at the outset and during the first one or two years, you’ll need to spend money on a variety of priorities — everything from your logo and website to legal costs, office space, information technology hardware and software, business travel and of course, accounting services. Budget up-front for all of it.
7. Tracking Expenses
Finally, keep in mind that tracking expenses is as important as categorizing them. Meals and entertainment are treated differently on your tax return than travel costs, which are viewed differently than investments in hardware or office furniture. You need to track these items precisely so that your CPA can help you maximize success when planning for taxes as well as future financing.
Are you ready to begin planning for a new business venture? Speak with the certified public accountants at Haines & Lagerquist CPAs today, by calling Sylvia Lagerquist, CPA or Ross Beach, CPA at 301-249-0703.
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