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    7 Replies Latest reply on Jan 6, 2009 1:05 AM by Bobby.Kolev

    LLC looking for CPA advice

    playaction Wayfarer
      Hi all
      I am the owner of a newly formed LLC. We are an internet based company that works with high schools. Since we are just forming, I am needing some advice.

      My wife is currently pursuing her accounting degree, and she will be handling the day to day accounting operations, but we both realize how important this part of the business is, so we are going to outsource some things to a CPA to make sure things are heading in the right direction and that we get all the taxes and stuff right.

      We are using Peachtree and will be using Peachtree's payroll services once we hire people. What I am needing to know, how often should we have a CPA look over our books? I feel comfortable with a quarterly review, but this is not my area of expertise. Since at the moment all of our people are 1099 contractors (4 sales people and 1 marketing person) and then there is my wife and I, the main thing I want to make sure of is that we are paying the right taxes at the right time and getting all of the tax breaks and benefits that we can utilize. We do not collect sales tax on our service (web based software and subscriptions) and have no inventory, etc.

      We are in Oklahoma, have an EIN, filed with the secretary of State, and even have a Duns number. Our business and private accounts are seperate. We are not truely launching until Feb of 2010, but I like to get things in order. I already have an attorney for the business, and now I need to make sure I have a good CPA on board as well. I can't afford very much at first, so any advice will be welcomed!

      Thanks
      Darrick
        • Re: LLC looking for CPA advice
          LUCKIEST Guide
          LLC looking for CPA advice, Welcome Darrick

          Everybody in Business should have a Lawyer, An Accountant and an Insurance Agent.
          You said that you have a Lawyer. Ask him for the names of two CPA's.
          Also talk to the CPA about 1099's. Again as you said 1099 are NOT employees. They could be contractors, but be careful. The I R S likes employees, does not like 1099.

          Good luck, Happy New Year, LUCKIEST
          • Re: LLC looking for CPA advice
            playaction Wayfarer
            Sorry, big mis-post, I stated we are not launching until 2010, we are actually launching in 2009! The holidays really got me going LOL. sorry about that piece of information. We are planning on bringing on a full time C/C++ developer in 2010, just getting my dates mixed up.

            Yes, I have been in touch with my attorney about the 1099 thing. Probably next year (well 2010 anyway) we will be going from 1099 to W2 employees. I appreciate your input Luckiest.
            • Re: LLC looking for CPA advice
              CPA_No.Calif Newbie

              You have several issues that should be addressed with a CPA. LLC's are very flexible but can cost you if not set up properly. Also you should strongly consider dropping the "contractor" designation for your "employees" and get them setup as employees ASAP since they probably do not qualify as "independent". Initially, I suggest you set up a phone conversation or face to face meeting with a CPA and discuss your plan and needs in depth. Then, based on that conversation both of you can decide how often to check in. However, given the depth of technology now you should be able to check in frequently with your CPA via one of many methods.

              Also, my experience is that start-ups try to do too many things because of insufficient capital not realizing that sound advice is an investment in your future success.

              Feel free to view my website @ advaluecpa.com and click on financial guides for information that might be useful

              Let me know if I can be of any assistance
              1 of 1 people found this helpful
                • Re: LLC looking for CPA advice
                  playaction Wayfarer

                  CPA_No.Calif

                  Thanks for the advice. My attorney has said the usage for the 1099 contractors would be fine for what we're doing, though, we will be changing everyone to W2 employees ASAP, which hopefully, if our financial projections hold up, will be mid to late 2009.

                  I took a look at you site, very helpful.
                  Thanks
                  Darrick
                • Re: LLC looking for CPA advice
                  SCCAlive Newbie
                  Darrick,
                  I am so glad to see you pro-active!! Keep that drive! I have owned LLCs for years. I discovered the hard way that every state has very different and fine lined limitations on 1099's and W2's. When I took my first LLC from AZ to CO I had to change. One benifit to going to payroll is to put you and your wife on payroll. This helps you and the business. You will still pay an estimated quarterly tax but you will be paid on a regular basis. As a business owner, the first place to cut costs is in our own wages. Not good. You will establish Workers COMP for employees but the members of the LLC my opt out with proof of medical insurance. Really the cost to you is minimal and it gets you established for future growth. Is your wife a member of the LLC? I recommend that she is and that you draw up an operating agreement. Your lawyer will let you know the pros and cons but I have found it most beneficial. Also, my LLC own lots of equipment, vehicles, buildings and land. Being a Limited Liability Company any lawsuit can come after your assets. Solution....I started a sister LLC that owns and leases all assets to the main LLC. No one can touch them!! There is always a crazy out there that wants to take you down. Sad but true.Lots of good stuff to share. I started my first LLC at age 24. I am an active member/manager and do all my own books. I would love to share more if you are interested. Please contact me: hazen@fone.net.
                  I am very excited for you!
                  HW
                  1 of 1 people found this helpful
                    • Re: LLC looking for CPA advice
                      playaction Wayfarer
                      Hi SCCAlive
                      Thanks for your enthusiasm! Currently my wife is not a part of the LLC, but both she and I are W2 employees after speaking with our attorney and a couple of CPAs. I guess in Oklahoma the 1099 usage is fine here for what we are doing as far as the sales guys.

                      my wife and I are both very excited and yeah, the reason we want to be W2 employees is for tax reasons. We are also electing for the LLC to be its own entity, totally seperating our personal and business accounts. We don;t really have any assets other than computer systems and servers, since everything we do is online with no tangable inventory. We're rolling out soon, so it's going to get kind of freaky. Our pro forma 3 year looks like it will be around $15 million, so we are treading new water, so we want to make sure we have everything in place for a rapid growth.

                      Do you use a local insurance company for workers comp, or do you use a state one? In oklahoma, we have the option. How much do you usually pay? I've done some research, and it's not that expensive for this type of business. I guess I can email you for that info.

                      Anyway, thanks!
                      -Darrick
                    • Re: LLC looking for CPA advice
                      Bobby.Kolev Newbie

                      While I can't reliably answer how often should a CPA go over your books I can offer some experience.

                      I have my online business since 1999 and a CPA only sees my books once a year - at the very end.

                      In fact, the first one or two years there were no CPA at all (and, true enough, I did not do anything with the revenue as I was too busy building the busines while being careful NOT to make expenses that may inappropriate both business wise and legally).

                      Eventually, I got a CPA review the mess that has been created. Luckily, he was a good one, but he was also helped by the fact that I had an already established pattern of work and more or less clear short-term goals.

                      If you want my 2c I'd say this is a great way to build a small business - focus on the business. I am not saying to ignore the accounting and the legal side, but come on, there isn't much to think about while you're still small in both the accounting and the legal departments.

                      It's more common sense and focus on the job and less concerns about IRS and Fate or you might as well never take off the ground.

                      At the end of the next year find a CPA, bring all your papers and operations and let them help you organize it. You'll learn tons of useful information and you will very likely discover you've broken one or two rules, but you'll break them no matter what you do...

                      IRS will forgive many mistakes made during the first year and it's only natural to do so; after all, there won't be much revenue in the beginning so it's not as if they're losing a lot anyway; and it's not as if you do it on purpose.

                      Focus on the business and just use common sense when it comes to accounting, legal and all other neccessary evils.

                      Over time, you'll learn that your common sense is slightly different than the one of Uncle Sam, but if you're willing to take that and adjust to his views, you'll have little problems.

                      That is, at least, my experience. It's not perfect, but I am happy with it and I hope Uncle Sam is too, because he gets lots of my money before handing them to corporations like GM that publicly admit they have done tons of mess and intend to continue doing so.

                      Finally, if you have online business, don't hire C++ developer. You are more likely to need a Java or C# one.