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- by Jane Applegate
Hiring A Bookkeeper Or An Accountant
They're Not Just There To Keep The Books - They're To Help You Run Your Business
Most people in business for themselves, especially those starting out, believe they can
keep their own books. After all, they find plenty of good accounting software on the market, programs that
practically fill the spreadsheets out by themselves. They believe they can save money and at the same time keep a
closer eye on expenses when they write every check themselves and balance every account.
Those arguments have a lot of appeal. But I've found that in the long run, a bookkeeper or accountant is not just
someone who keeps track of the pennies and receipts, but a key member of your management team. I ask my accountant
whether I should lease or buy a car, extend a business trip into a vacation, and how much I should put aside for
retirement. In short, specialists are worth their salt because they know how to save you time and money.
One example: If you're thinking of buying a truck or van for your business, did you know that if the vehicle weighs
6,000 pounds or more, it qualifies for the so-called Section 179 expensing election? That means you can deduct
$24,000 of the cost. A passenger car--that is, one that weighs less than 6,000 pounds--is eligible for a deduction
of only about $3,000. Thus a business owner with the choice of buying a Chevy Suburban, at 5,700 pounds, and a Ford
Super Duty Van, at 9,000, may choose the latter for the tax break. (The cost of gasoline is another matter!)
That's a tip from tax guru Kerry Kerstett, a CPA in Harrison, Arkansas. It was one of several tips that made the
finals in a contest for bookkeepers and accountants just held by Intuit Software, maker of the popular QuickBooks
accounting programs.
Here's another: When the tax season approaches, or especially if your company is preparing for an audit, it doesn't
pay to have a CPA perform the routine tasks of balancing accounts and putting your books in order. Althea Klahr, a
small-business consultant at the Marvin and Co. accounting firm in Latham, New York, estimates a savings of 35
percent when you use a bookkeeper instead of a CPA. She said that some small businesses, as well as nonprofit
entities such as churches and community organizations, will learn they need an audit to qualify for government
funding, then unwisely rush out to hire a CPA when the first step is just to get an outside bookkeeper.
"Accountants can recommend paraprofessionals if their firm doesn't have any on their staff," says Klahr, using the
industry's term for bookkeeper.
My own advice at tax time is to consider using an enrolled agent. That's an income-tax specialist licensed to
prepare returns and filings. Enrolled agents have been around since the 1800s and really know their stuff because
they have to pass an intense examination given by the IRS. Most enrolled agents are former IRS employees, many of
them examiners. An enrolled agent charges $50 to $150 an hour depending on where you live, according to Frederick
W. Daily, author of Tax Savvy for Small Business.
Mindy Schwartz, owner of Balanced Book Co. has special advice for start-ups: "When trying to decide whether
there is a need for new or different employees, the business owner should always assign a dollar value to the
services he personally provides, even if he isn't currently taking a salary," Schwartz says. "It is too easy for a
small-business owner to just manage everything without taking into account the value of his own time, and comparing
that to the cost of an employee performing the same task."
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