Consultants need a good accountant on their business team, and it should be the first team member they hire. Some work-at-home moms miss certain tax benefits, because they don't have an accountant to explain those benefits and help them take advantage of them. An accountant can also help with business planning, and give expert advice to help you maximize your assets, and grow your business.
Here are 4 reasons consultants should work with accountants:
1. Pay Lower Taxes
Accountants will help you pay the lowest taxes permitted by law. To be a successful consultant, you have to minimize your tax liability, by taking business deductions and filing for credits. Consultants are too busy to learn the tax code, or keep up with new tax laws. Accountants are in business to do that for you. The more you overpay in taxes, the less money you'll have to pay yourself a salary, buy health insurance and reinvest in marketing your business to get more clients. Hire an accountant to get good tax planning advice.
2. Payments to Contractors and Employees
One area where consultants get into trouble with the Internal Revenue Service (IRS), is in hiring contractors or employees. There are strict rules as to who can be considered an independent contractor, and there are forms and reports that you have to submit to the IRS when you hire people. Your accountant will know what those rules are and can prepare the forms you need and file the necessary reports. For example, if you hire a freelance writer to help you generate content for your website and pay them over $600 in a tax year, your accountant will know what form to submit to the IRS and to the freelance writer, and prepare them on your behalf. If you decide to hire that freelance writer part-time or full-time, your accountant will take care of or advice you on payroll matters, including taxes.
3. A Resource to Clients
Your accountant can become a resource to your clients. Consultants who are able to solve many of the problems that plaque their clients, even ones that are not directly related to their area of expertise, will have loyal clients that stay around for a long time. Clients often have financial issues that need solutions, and you can direct them to a competent accountant that you use to help them. Don't refer them to someone who doesn't have good communication and relationship skills, because it will turn off your clients and it may end your relationship with them.
4. Business Planning
If you've never operated a service-based business before, your accountant can be a great resource for business planning. They have access to figures and statistics based on their work with other clients, that can benefit you. Some of the statistics that you research on the Internet are not current, or a realistic representation of what consultants face. That's why when you interview accountants, ask whether they work with other consultants as well. They can use their experiences with consultants to help you succeed in your business.
Hire an accountant for your tax planning needs first, if you don't
feel that you can afford monthly or quarterly services. Consultants
benefit the most when they can utilize the services of accountants on a
monthly basis, but it may take a year to work up to that point.