Keep your eye on the Accountant who is keeping an eye on your business.

Accountants are among the most trusted professionals out there. There is a strict code of conduct that we are supposed to adhere to as it pertains to the work we do for our clients, particularly when we are licensed as a CPA.

Providing accounting services is an enormous responsibility, and should be treated as such. You rely on us to do the job of making sure your business and personal tax, payroll and bookkeeping affairs are in order. That is the job we do.

So what should you expect from your accountant?

There are many things you should expect from your accountant, and things that you should really be making sure they do.

In this article I will cover 5 of the more important things that you should be making sure your accountant does on your behalf,

Whether you’re an individual or a business owner, few things strike fear into your heart like learning that you’re being audited by the IRS. The good news? Those budget cuts that have plagued our government may actually work to your advantage. It seems that even the Internal Revenue Service has felt the pinch, and as a result its audit rates are lower than they’ve been in years. Even so, says Ann Irons, who offers business tax preparation in Bellingham, MA, this doesn’t mean you should let your guard down.

Which Businesses Are Most Likely to Be Audited?

The IRS isn’t exactly forthcoming with details of its audit algorithm, but data from Tax Court cases suggest that certain types of businesses and select tax return items are more likely than others to come under fire. These include:

Home offices: Whether deliberately or otherwise, the write-offs for home offices are among the most commonly miscalculated or misreported figures on federal tax returns. The majority of these are errors in the area designated as “regularly and exclusively” used during the course of business. If you run your business from your home, your CPA can advise you on which expenses are eligible.

Substantial vehicle write-offs: Section 274 of the tax code sets forth guidelines for eligible entertainment and miscellaneous expenses, and that includes the use of their vehicle. A common, glaring error is deducting the full 100 percent of their vehicle use as business-related. The requirements to do so are extremely narrow, and the vast majority of taxpayers cannot rightfully claim this. Of those who do meet the requirements, few have kept records sufficient to justify their claims.

Real estate rentals: If you devote a minimum of 500 years to rental real estate functions, or if you have done so for 5 of the 10 previous years, you qualify under the tax code as a real estate professional. Because this area is commonly audited, says Irons, it’s in your best interest to keep detailed records of the hours you spend on these activities, as well as a brief description of how the time was used.

Schedule C losses: Most of the time, the Internal Revenue Service classifies Schedule C activities as hobbies rather than as businesses. The rule applies particularly to activities that would afford some personal benefit or enjoyment factor, such as photography or writing about subjects like food or travel. Most suspicious are returns that reflect a higher than average salary or business income.

Smaller companies: It almost seems like a case of “picking on the little guy,” but the IRS has fairly good reasons for frequently auditing small firms. Whether by willful ignorance or honest error, small businesses owners often lack the comprehensive understanding of tax laws needed for full compliance. They’re also less likely to keep thorough records, a fact that clearly justifies the need for an experienced outsourced accounting firm. If you deal almost exclusively in cash – no checks or credit – you are even more likely to be audited.

Travel, business meals, and entertainment: Woe is the business owner who misreports these expenses on his tax return, for the IRS comes down hard on this category. Requirements in this area are even more restrictive than those of home office expenses. Compounding the risk is the knowledge that small businesses are less likely to have adequate documentation, as well as the potential for illegal deductions of entirely non-business-related personal expenses.

Are you prepared for an audit? If not, it’s time to consider enlisting the services of a Bellingham, MA CPA. To learn more about our services, or to schedule a consultation with Ann Irons, CPA, LLC, contact us at (508) 966-0700. We serve businesses and individuals in Bellingham, Milford, Medway, Worcester, and Woonsocket.

Target. Sony PlayStation. AOL. All are powerful corporations and brands with revenues in excess of billions, and yet all have fallen prey to security breaches, compromising their customers’ financial and personal information. Ouch. Maybe your business doesn’t bring in millions (at least, not yet) but it would be unwise to assume that the modest size of your company makes you invisible to similar threats. CPA Ann Irons, whose Bellingham, MA accounting office offers a variety of small business services, explains the importance of protecting your customers’ important data – and their trust.

Small Businesses Are at Risk

Although these incidents and others have been widely publicized, the truth is that most small-time criminals are more comfortable targeting smaller businesses than large corporations. In fact, a 2012 report shows that approximately 31% of all cyber attacks – criminal acts undertaken via the internet or another network – were aimed at small businesses with less than 250 employees. Worse yet, this was almost a 10% increase over the previous year.

You could be the savviest shopkeeper in town or the master of all things entrepreneurial. Regardless of whether you’re an absolute expert on your customers, your market, and your industry, there’s always the possibility of an unforeseeable accident. From natural disasters to security breaches to bio hazards, not all threats are immediately preventable. Your best bet? Business insurance. Ann Irons, a CPA in Bellingham, MA, shares five considerations for choosing business insurance.

Step 1: Evaluating Your Risks

Underwriting is the process by which an insurance company sets its acceptable threshold for risks, which they use to determine which policies are issued. An underwriter evaluates your insurance application, then makes a decision to cover all or some of the requested amount of coverage. As with any type of insurance, business insurance is comprised of a deductible and premium. Several factors influence the premium amount: the type of building used by your business, its physical location, and how much insurance you’ve purchased.

$30,000 – that’s the average cost of setting up shop and starting your own business these days. It may not seem like much at first until you consider the competition for loans and the difficulty securing a hefty investment up front. When you’re unable or unwilling to seek loans from private lenders and banking institutions, your natural inclination may be to approach friends and families. Here are a few things to keep in mind, compliments of Ann Irons, a small business CPA in Bellingham, MA.

Weighing Your Options

Before you approach a prospective financier, consider the advantages and disadvantages you may encounter over the course of business:

Pros

• You’ve already established trust
• Fewer requirements must be met
• Subjectivity, or the “We know him; he’s a good guy” advantage
• Cash is usually received sooner
• Less paperwork

Cons

• Lender may expect to gain control over decision-making in exchange for funding
• Failure or delays in repayment can harm relationships
• Other perceived entitlements, such as free or discounted merchandise or services

You're an expert in your products, services, clients, and market. A multitasking pro, you're never afraid to roll up your sleeves and tackle a challenge.

Unless it involves accounting, that is.

Even the savviest entrepreneurs admit that accounting is among the most intimidating and confounding aspects of running a business. Unwilling to admit defeat, many have turned to Accounting for Dummies and similarly self-deprecating resources. What not everyone realizes from the outset is that this approach is time-consuming and easily misinterpreted. Bellingham, MA certified public accountant Ann Irons explains why there's no shame in seeking professional help for your business.

Cut your expenses. It sounds obvious enough, so why do so many real estate law offices fall short of their profit potential? The self-defeating practice of ignoring expenses isn't limited to firms that are in deep financial distress. We also see it in firms that are profitable but complacent. Ann Irons, a CPA who provides accounting services for real estate lawyers in Bellingham, MA, explains how small and solo practices benefit from cutting fixed expenses wherever possible.

Once you’ve made the decision to establish a start-up company, it’s easy to get caught up in the excitement and optimism that comes with the idea of offering a quality product. Even so, it takes more than enthusiasm to succeed in a new venture. Citing a recent report from the U.S. Census, Ann Irons, a CPA in Bellingham, MA, points out that nearly half of all start-ups survive past the five-year mark. The most successful start-ups span diverse industries and thrive with all types of entrepreneurs at the helm, yet all share one common characteristic: a solid financial foundation. Who better to guide you through the startup process than a Certified Public Accountant?

Choosing the Right Structure

The structure you choose for your new company has major legal, financial, and tax implications. Before committing to a structure, speak with your CPA to discuss the advantages of disadvantages of each option. You may determine that while one offers significant tax advantages, another is more conducive to meeting your long-term goals in other areas. Upon finalizing your decision, you must apply for tax identification numbers, often with several different agencies. Even the most seasoned entrepreneurs find that a CPA’s assistance is invaluable in sorting through tax matters, which can include everything from liquor and excise taxes to sales and payroll taxes.

To most small business owners, the concept of payroll seems simple enough. Your employees work, you cut a check. Right?

Wouldn’t it be nice if investing time and money guaranteed the long-term success and stability of your business? If your passion was always profitable? Unfortunately, this isn’t always the case. When you’ve exhausted all of your options and concluded that you can no longer continue operations, it’s emotionally devastating. Ann Irons, a professional tax preparer and CPA in Bellingham, MA, says that many small business owners’ distress is so great that they neglect to consider all of their options.

Option #1: File for Bankruptcy