If are not able to file your income tax returns by April 15th, you can apply for an extension. But you have to file the extension by April 15th! Ironic, isn’t it?

Filing an extension to file your federal and state income tax returns is fairly easy. You would have to complete IRS Form 4868 and postmark or e-file it by April 15th.

An extension gives taxpayers an automatic 6 month extension to file their tax returns. The new due date for your return will most likely be October 15th. Most states accept the IRS form as proof of extension for state income tax returns.

At this point in the game, I would not recommend requesting an extension via snail mail. If you qualify for the IRS Free File program, you can file your extension for FREE!

 If you do not qualify, you can still use participating partners of the Free File program. It may cost you!

What do you need to do to file an extension?

1). Do some math!

You will need an estimate of your tax liability. I know what you are thinking, “Who actually knows what that number?!?!” Your trusted accountant or tax preparer should know! Also, you can use the IRS Withholding Calculator to give you a round estimate.

2). Grab your W-2 and check copies!

You have to let the IRS know what you paid through payroll deductions and estimated payments throughout the year.

3). Cut a check!

If you file an extension and a balance is in fact due, send a payment along with your extension. An extension is a filing extension, not a payment extension or waiver.

After completing these steps, you now have 6 months to get your taxes done. I suggest you do this before May. You don’t want to wait to until the last minute again. Do you?        

Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being fluent in English instead of “Accountant-ese”.

I can relate to Bob’s statement. I am frequently mistaken to be a certified public accountant (CPA). I am constantly explaining the fact that I am a very talented accountant and tax preparer who wanted to be a CPA at some point.  To Joe Blow on the street, that last statement means absolutely nothing. Honestly, sometimes I think the Joe Blows of the world really don’t know what a CPA does. Yet, I receive suspicious stares when I state that I am not a CPA.

I could have explained in depth and given a detailed description of each professional. As I began to write, the blog post was almost 3 pages. Way too long! Let’s highlight the key differences between the financial professional in a simple way:

In my personal and professional opinion, a CPA is similar to wine.  People often assume that the older and more expensive the wine is, the better the wine will taste. However, someone could enjoy a $15 bottle of chardonnay more so than a bottle that costs $85. Some people pick financial professionals in the same fashion. The older the CPA is and the higher the hourly charge, the more likely someone like me will get passed over. But AICPA explains difference between a CPA and someone like me as follows:

“All CPAs are accountants, but not all accountants are Certified Public Accountants. The principal differences between accountants and CPAs are education, experience, and opportunity…A CPA certification distinguishes one from other business professionals – the benefits are increased trust, opportunity, and financial reward.”

I have a lot attributes that allow me to compete with CPAs. Using the chart above, I highlighted how I measure up to the competition.Click here! 

To make myself even more competitive, I will be taking the Special Enrollment exam after April 15, 2012 and before May 31, 2013. Once I pass the exam, I will have unlimited practice rights before the IRS just like a CPA.

Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being fluent in English instead of “Accountant-ese”.

I was inspired to write about the impact of the W-4 after speaking to  one of my SCORE clients via Skype today. I spent about 20 minutes explaining how fill out the form correctly. Here the reason: my client is going to expand her business and will hire employees in 2013. She wanted to know what forms she needed to have the future employees properly registered and documented. One of these forms was IRS Form W-4.

After our Skype session, she thanked me for explaining the form line by line and said I “made sense” of the form. At the end of the conversation, I was relieved that she understood an IRS form! But then I realized that other people could benefit from the explanation I gave to her. 

By the end of the blog post, you will accomplish 3 things: 1). Download a W-4 and complete it with confidence.
2).Know your correct tax filing status.
3). Taking control of your net paycheck for the rest of 2013.

You can download the form here.   With the form printed, follow my instructions below to complete it.

Select your filing status or determine your filing status by using  the IRS application What is My Filing Status?.

Line A- Fill in “1” if your parent or other relative will not claim you on their tax return.

Line B- Fill in “1” if there is only one household income or the second income is less than $1500 in 2013.

Line C- Fill in “1” if you have a spouse that does not work.

Line D- Fill in the number of dependents that is supported by your income. You have to cover at least 50% of their living expenses. To find out  if someone is your dependent, use the IRS application Who Can I Claim as A Dependent?

Line E- Fill in “1” if you are filing Head of Household and have a qualified dependent.

Line F- Fill in “1” if you will pay at least $1900 for child or dependent care expenses.

Line G-This is most complicated line. It is broken down two steps

1.Count the number of children under 17 in the household and multiply by 2.
2.If you have 3-6 children, subtract 1 from the result of step 1. If you have 7 or more, subtract 2 from the result of step 1.

Taxpayer with 2 kids would enter “4” [=2 x2]. Taxpayer with 3 kids would enter “5” [(3x2)-1]. Taxpayer with 7 kids would enter “12” [(7x2)-2].

Line H- Total of lines A-G.

If you are having trouble with the directions above, I created an simple, yet interactive W-4 calculator. You can download it here. Or you can shoot me an email or call me. I can walk you through the process.

Last tax season, the average tax refund was about $2,900. By using the steps above to complete the W-4, you can bring additional funds into your household for the year. Stop giving the IRS a free loan on your money!What could you do with $2,900?

Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being fluent in English instead of “Accountant-ese”.

One of my potential clients had a common dilemma most people have after leaving an employer. She left her 401(k) behind too. It was a small amount that she had accumulated while at working a part-time job about 9 years ago. She asked me a very good question a couple of weeks ago.

“If I take the money out and have the appropriate amount of taxes taken out, I will I owe taxes still at the end of the year?”

My answer to her question: “You will have to pay a 10% federal penalty and 5% penalty to the state of Wisconsin on top of the taxes, at the end of the year.

Most taxpayers would think that you wouldn’t owe any more taxes if you opt to pay upfront. If you withdraw funds from any retirement account before the age 59 ½, the IRS will charge a penalty of totaling to 10% of the total amount requested.  Some states charge a penalty as well, and Wisconsin is one of them.

My knowledge of this rule prompted me to ask the client “Is there a way you can roll it over into your current 401(k) account?” She told me she tried, but the old employer gave her the “run around” and that the decided that the amount was not worth the hassle of fighting them to do what she wanted.

 One thing I learned the hard way is not to leave your financial assets with a company you are no longer doing business with, especially if you are no longer an employee.  What reason would they have to continue to care about your financial future anyway?

After reading her response, I also informed her that the amount she would take would also be taxed at her personal rate. I offered a free consultation to help her determine at what tax bracket she would fall in so she could request the correct tax rate for her withdrawal. She opted to look up her tax rate in the IRS tax tables. How financially savvy of her!

I’ve known the client for years. I pretty much know her what events take place in her life. So any of the “loopholes” I know would not have helped her. If you were never told before, for every tax rule there are exceptions.  Below are some events where the IRS would waive the 10% penalty. 

1. You die and the money is given to your beneficiary.

2. You become totally and permanently disabled.

3. You request that the funds to be paid over time during your life, or your beneficiaries life, after you leave your employer.

4. You use the funds to cover medical expenses that exceed 7.5% of your gross income for the year.

5. The IRS levies (takes money from) your 401k account.

6. If you are a military reservist and have been called to active duty for at least 6 months after September 11, 2001.

7. If you are age 55 or older and leave your employer.

8. If you are age 50 or older, were a state or government public safety employee and you left your job.

9. If you are ordered to pay someone else for child support or alimony.

10. If you cash in dividends from an employee stock plan.

Do you have tax questions about your retirement account? Shoot me an email. I am here to help!

Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being fluent in English instead of “Accountant-ese”.

Sometimes I am asked by potential clients what is the best accounting software to use. My recommendations usually customized to the entrepreneur. If you have a brick-and-mortar business and have employees, then software with all of bells and whistles might be best. But if you are a business nomad like myself (my business goes where ever I go), then you might need a simple software option that is quick and easy to navigate. 99.9% of the time, I try to push people toward cloud options that are free. Why? THEY ARE FREE! Another reason I am a champion of free cloud options is the responsibility of maintaining a server and other IT requirements is placed on someone else. Unless you are an IT consulting firm, there is no need to bog yourself down with learning how to be the IT police.

 I checked some cloud accounting options out for a client. I was really shocked at how some applications made the accounting process easy for the user. Maybe a little too easy for my liking.  Here are some of my top cloud-accounting software picks.

FreshBooks  is a freelancer’s dream! It has visual appeal and catchy quotes and fact littered throughout the site. It is the current leader in cloud accounting with over 5 million users. Pricing starts at $19.95 each month after the 30 day trial. It also features Accountant tab where user can find accountants, and were accountants can become FreshBooks certified. Currently, software support is available Monday through Friday from 9am to 6pm (ET).

What I liked best about it:
-The free webinar that teaches the user to become a master within 45 minutes.
-It is super easy to add expenses and such.
-The separate component for time tracking is included.
-They offer decent “refer-a-friend” program.

What made me say “WTF”:
-It doesn’t have an Android app.
-It puts a limit on the number of clients you can manage under the first tier. 
-There is no Statement of Cash Flows report. It is critical to know where the money is going.

Outright claims to be the answer to the all-so feared “tax-time headache”. It offers a free account and also another subscription option for $9.95 per month. After you categorize your transactions, Outright automatically creates a cheat sheet for your Schedule C. It even calculates mileage deductions for you.

What I liked best about it:
-It’s tax oriented!
-It offers tax forms for those who do a lot of online retail sales.
-It allows you to generate reports quickly
-It has a blog that offers tips and advice.

What made me say “WTF”:
-It has connectivity to Facebook. Who wants have their financial data connects to the largest social media platform in the world?
-It has no billing platform.
-The tax headache solution is only offered with the paid subscription.

QuickBooks Online  has four software versions that you can access through Smart Phones. Each version also allows access for multiple users and exports data to Microsoft Excel.  This would be the type of software your accountant would want you to use! The Online Simple Start subscription allows users create invoices, print checks, and has over reports that would be useful in analyzing the business. It only cost $12.95 to maintain the subscription after the trial period of 30 days. Intuit also offer 24/7 support for no additional cost.

What I liked best about it:
-Connectivity to bank and credit card accounts online.
-Looks just like off-the-self QuickBooks software.
-Has a “To-Do” List to keep the users on track.
- There are introductory video for first-time users.

What made me say “WTF”:
-The “Create Budgets” function is part of the upgrade to the top tier subscription.
-It is very easy to mess up in accounts.

Wave Accounting is a Canadian based company that is currently expanding. Wave states on its website that it was “made for entrepreneurs, freelancers, consultants, and small businesses with less than 9 employees”. It offers a totally free accounting platform, however there is a cost for adding payroll (for less than $5 per employee) and a credit card platform.

What I liked best about it:
-Connectivity to bank and credit card accounts online.
-The Dashboard (first screen after signing in) has a graph of your financial progress.
-It has a built-in personal finance platform.
-It is very difficult to make a mistake in the accounts.

What made me say “WTF”:
- There is no Statement of Cash Flows report.  Another culprit!
-The amount of ads on the platform. But it is free….

After poking around all of the software applications, I really didn’t like one more over the other. I have yet to find a perfect accounting software system, and I used to work in Corporate America. But my little investigation proved a point to me. No matter how good your accounting software may be, it can never replace your trusted, neighborhood accountant.

Have questions about picking the right software for your small business? Email me or call me to discuss what options are available to you.

Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being fluent in English instead of “Accountant-ese”.

 I was featured in an article that focused on the top write offs for business owners.  In the Top Ten Write Offs for the Self-Employed  some of the business deductions were highlighted. However, when some entrepreneurs look at tax forms, schedules, and instructions they can become overwhelmed. 

The first step in not being overwhelmed is finding out if you need to file Schedule C or C-EZ . View this video from the IRS to see if you need to file it: 

The next step is creating a plan to take advantage of all the business deductions applicable to your small business. For those who have a separate brick-and-mortar establishment, the most expenses listed on Schedule C are very straightforward. For people who have home based businesses, virtual entrepreneurs, or business nomads (people who work from public places like coffeehouses or rent meeting spaces as needed), there are some gray areas that have to be examined.

This Small Business Deductions Checklist is designed to be a Schedule C and Schedule C-EZ Guide for those who need help identify what expenses are applicable to their business and to explain those “weird” deductions.

Business Use of Home
Documents Needed

• Rent receipts ,cancelled checks, mortgage statements
• Utility bills: heating, gas, water, internet
• Insurance Statements
• Layout or blue print of dwelling (for your records if IRS asks).

 Whether you rent or own, if you can deduct part of your housing costs if you have a dedicate space or room for your home office.   This expense is calculated on Form 8829 (line 30 on Schedule C). To calculate your home office deduction:  

Total Area (Square Feet) of Living Space ÷ Area Size of Home Office= Business Home Use %

Cell Phone/Telephone
Documents Needed

• Cell phone bills for past year
  

Do you have a separate business telephone or cell phone dedicated for your business? Deduct it! Are you using your personal cell phone for business? If so, you and I have something in common: a tax deduction is available for our use. This expense should be monitored and calculated on a monthly basis. To calculate your business cell phone use:

 Total Cell Phone Bill ÷ (Total Cell Minuets Used –Personal Calls Made) = Business Cell Use %

Supplies or Office Equipment
Documents Needed

• Receipts for purchased over the last year.
• Warranties and vendor contracts.

Some business owners believe that a printer is a business expense when it is really a piece of office equipment. This is the most common error I see when I review accounts for clients. To determine whether or not something you purchased for your business is supplies or office equipment ask yourself these questions.

1). How long do you think you can use the item? If it is 2 or more years, then it is probably a piece of office equipment.

2). If it breaks, are you more likely to replace or repair it? If you decide to replace it, it should be considered a part of supplies. If you repair it, it’s office equipment.

Also, most businesses set a dollar limit to help determine whether to classify a purchase as an expense or an asset (i.e. office equipment and furniture). My rule of thumb to my clients: Anything over $200 should be review with the two questions above. Everything under $200, just expense it!

Software /Online Cloud Subscriptions
Documents Needed

• User Agreements
• Billing Statements

Cloud computing has grown tremendously to suit the needs of the small business owners. I encourage small business owner to consider solutions in the cloud as often as I can. Some services are free, others you have to pay for. If you pay for cloud solutions like QuickBooks and Zoho, deduct the monthly fee and taxes on your taxes as a software license fee.  

Also, monthly maintenance fees for your website are deductible.

If have to purchase software, it is possible you can deduct the full cost on your taxes. There is also a possibility it may have to be depreciated (or its cost recognized over time) over 36 months. The Section 179 Deduction is a massive piece of IRS Tax Code that tries to include all capital assets, but has many restrictions. Welcome to the magical world of the IRS! To the average, hard-working entrepreneur Section 179 is most applicable to software purchases. However there are some requirements that have to be met in order to deduct it:

For basic eligibility, the software must meet all of the following general specifications*:
1.The software must be purchased outright by you.
2.You have to use the software in your business to earn revenue.
3.You have to be able to determine how long you will use it.
4.The software must be expected to last more than one year.

In addition, these three specific stipulations must be met*:
1.The software must be “off the shelf”.

2.The software can be used by multiple users.

3.The software cannot be customized to suit your business.

*Translated in to plain English from http://www.section179.org/section_179_and_software.html.
Auto Expenses & Mileage
Documents Needed

• Loan or lease agreement
• Repair and Service Receipts
• Gas station receipts
• Mileage log(s)
• Date book or calendar

If you have a vehicle that is used for business and personal functions, only the business use is deductible. You will have to keep record of each time it was used for business. I have yet to see a “multi-purpose” vehicle is used for 100% business. Neither has the IRS!  

There are two methods of claiming expenses for a use of a vehicle:

1. Actual expense method is the business portion of all cost associated with a vehicle.  This method provides a larger deduction if you are using a newer vehicle. Also, if you use the actual expense method, the vehicle can be depreciated. You have to determine the actual cost of operating the vehicle. Vehicle operation costs include gas, oil, repairs, tires, insurance, registration fees, licenses, and depreciation and payments, attributable to the portion of the total miles driven that are business miles.

2.Standard mileage rate method’s  calculation is:

Total Business Miles Driven × Standard Mileage Rate= Business Mileage Deduction

Business Mileage Deduction + Tolls and Parking Fees= Total Business Vehicle Deduction

The standard mileage rates are 56.5 cents (2013) and 55.5 cents (2012). The IRS requires that if you use the standard mileage rate, you have to keep a record of all miles driven in that particular vehicle. To qualify for the standard mileage rate, you must use it the first year you use a car for your business activity. 

Business Meals and Entertainment
Documents Needed

• Cash Register Receipts or Order Confirmation

You might decide to “wine and dine” clients, throw an office party for your employees, or treat yourself to a dinner for landing a major client. Regardless of the reason: only 50% is deductible for business tax purposes. If you paid cash, do not let this happen too often. The IRS requires a proof of purchase or receipt of all expenses over $50.

Professional services
Documents Needed

• Signed Service Contract
• Cancelled Check ,Bank Statement, or Receipts

Have you hired an independent contractor during the year?  Hired a new accountant or CPA? You can deduct what you paid them in full on Schedule C. But you have to fill out some paperwork to get the deduction. You must issue a Form 1099-MISC to IRS and the contractor by January 31st of the following year.

Membership Dues
Documents Needed

• Proof of membership
• Cancelled Check ,Bank Statement, or Receipts

Are you a member of a business club or group? Do you rent meeting or office space as needed? Those dues and fees are fully deductible!

Credit Card Interest
Documents Needed

• ·Monthly Statements

Do you use a credit card for business purchases? If so, the interest charged on the card is fully deductible. Used your personal card for business? Assign the appropriate interest amount for the business deduction.

Charitable Contributions:
Documents Needed

• Cancelled Check
• Receipt or letter from organization that received donation

Giving back to your community has both social and financial benefits. That feeling you will get when giving to a local nonprofit is surreal.  You will probably feel even better knowing that you can deduct your contribution in full on the business tax return.

Hopefully I gave you some insight as to the tax planning that is necessary as a business owner. Have a question about a deduction? Need clarification on a deduction I did not review? Post a question or shoot me an email!

Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being fluent in English instead of “Accountant-ese”.

I attended a webinar about the impending doom of the fiscal cliff last month.  There was a lot of dry and boring conversation about dividends, capital gains, and gift taxes. It probably would have been more interesting if Montgomery Burns from the Simpsons© explained what the fiscal cliff consisted of.

As I listened, I noticed that this cliff seemed to only affect those that are well to do, or rich. My client base is consists of working, middle class families and entrepreneurs. My clients are more concerned about how they are going to pay college tuition for their kids, not harvesting capital gains.

As I prepared to write this blog post, I reviewed my notes and realized none of the information was extremely vital to my client base. I literally had to ask myself “What the f$%& was the fiscal cliff anyway?” Here is what the media should have told you about the fiscal cliff instead of scaring you.

The Fiscal Cliff in Plain EnglishThe fiscal cliff primarily affects those who have a huge stake in the investment community. The “cliff” consisted of a combination of tax increases and spending cuts that were created to offset tax cuts and spending increases approved by George W. Bush during his presidency.  See the components above. President Obama wanted to let the Bush tax cuts expire for the rich folks, raising $1.4 trillion over 10 years. If a compromise was not reached, the economy would have gone into another recession in my opinion. The opinions of economists, policy makers, and other yahoos said If the problem had not been solved, the economy could have gone into another recession by .5% or expand by 2%. Sounds real convincing, right?

How the “crisis” was “solved”

 So the last 3 weeks, the President and the House have been arguing about who needs to pay more taxes. In the end, the President won. Higher taxes will be imposed on households making more than $450,000 each year, which represents about 2% of all taxpayers.  But the Social Security tax will go back to its original rate of 6.2% (12.4 for the self-employed). The compromise bill signed by Obama will keep middle class families from paying alternative minimum taxes (an additional income tax for those   who deemed to be rich by the IRS) permanently and saving these families about $3,000. It was supposed to be a win-win for all. It is estimated that households earning between $500,000 and $1 million will see a tax increase of $15,000, and those over $1 million it would be about $170,000. In comparison, the social security tax increase will result in a tax increase between $1,000 and $5,000 dollars for middle class families.

But this bill has apparently left some loose ends. The ever rising deficit was not addressed. There are spending cuts that were delayed that will come into effect to the tune of $110 billion and the credit limit of America’s credit card has to be increased again. Haven’t I heard this BS before? I do not remember the deficit ever being solved or addressed since I was able to vote (2002). Honestly I did a better job of balancing the budget using Wall Street Journal’s Make Your Own Deficit Reduction Plan tool.

The Moral of the Story

The middle class is paying a little more taxes, instead of a lot more taxes. The rich are paying significantly more in taxes, instead paying at middle class tax rates. The US government spent more than it brought in…AGAIN. I am certain policy makers will find a new crisis that will scare the public within a few months. So I anticipate asking my question again: “What the f$%& does that have to do with me and my clients?”

Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being fluent in English instead of “Accountant-ese”.

Sources:

CNN, Fiscal cliff’s new definition of rich

Wall Street Journal, Congress Passes Cliff Deal

CTVNews, U.S House approves deal to advert fiscal cliff

I was inspired to create the tips below after teaching a couple of workshops for the Southeast Wisconsin Chapter of SCORE. The factoids below are based FAQs I encountered throughout out my professional career as an accountant, entrepreneur, and mentor. I comprised the list as if I was answering questions in less than 60 seconds.

Accounting is a social math that explains what transactions a business has done in a certain period of time. It only requires My Dear Aunt Sally (Multiplication, Division, Addition, and Subtraction).

Break-even analysis of your business is necessary in order to be successful.

Cash Flow is completely different from profit and should be monitored daily.

Depreciation is an expense that saves cash by allocating the costs of assets purchased each year.

Expenses should be recorded in the same period as the revenue it earned.

Federal tax payments should be made quarterly.

Get every business deal in writing. Contracts help you and the client in the long run.

Hire wisely. The average cost of hiring the wrong person is $25k to $50k.

Interest paid on credit cards used for the business is deductible.

Just dedicating two hours a week to updating your books could save you 2 days during tax season.

Keep receipts for The IRS, which requires that purchases over $50 have a receipt.

Learn, leverage, launch is the business start-up model everyone should use. Learn about your business, leverage your network connections, and then launch the business.

Mileage is deductible to and from clients, job sites, networking event, etc. Not to the grocery store.

Never use your personal checking account for business transactions!

Operating Margin is determines how much money your business makes on each sales dollar.

Planning is essential to make profit. Identifying key performance indicators needed to monitor profitability is a great first step.

QuickBooks is not for everyone. Research all software options before purchasing.

Retained Earnings reflects that amount the business earned and can be reinvested in the business.

Statements of financial position are required for funding! Credit scores just don’t tell the whole story.

Team of professionals your business needs: accountant, business banker, insurance agent, lawyer, and mentor.

Understand the Industry you are in. If you know of the industry works, you will know how you will make money and how much you will spend.

Verify contract terms with the bills you receive. All too often business owners pay based on good faith.

Wives are not the best accountants. A lot of husbands tell me that their wives help spend money, not save it.

Xerox or digitally scan everything! I am frequently meeting clients who have mounds of paper and I have to wait for them to sort through it all.

Year-end should not be the only time you speak to your accountant.

Zero overdrafts on the business checking account. Overdrafts features of a bank account is an expensive form of financing.

Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being fluent in English instead of “Accountant-ese”.

There comes a point in every entrepreneur’s life when they say this to themselves, “I need to hire someone to help me!” I want grow my business to the point that I am able to create jobs for some great people I have met along my journey. They don’t know it yet, but they will work for me one day!

My ultimate goal is to hire a slew of part-time consultants, two full-time staff accounts, and my own administration support key person. I personally want a Girl Friday (I have a particular lady in mind), but I would open to a Guy Friday too. However as small businesses owners, we have a tendency of hiring whoever is most convenient, not who is most capable.

 All too often, I see entrepreneurs hiring family and friends with good intentions, but for all the wrong reasons. Just watch Restaurant Impossible, Cake Boss, or Sweetie Pies. I apologize for all the cooking show references. I am obsessed with the restaurant industry!  Be the Boss is also a great show too. These kinds of shows exhibit my point: you don’t know how people will act until they are in uncomfortable or difficult situations. In my line of work, results and quality are characteristics that are non-negotiable. Basically, my former clients may say something negative about me, however I will not put them in the position to say that I can’t count or my service sucks. I need my future employees to understand that and work to that standard as well.

I read a Manta tip this month that stated that 2/3 of hiring decisions fail within 3 years. I also taught a business plan course this year, I used an article as supplement material called the 7 Cs of Hiring. It stated that the cost of hiring the wrong person is usually $25-$50K. Needless to say, this fact sort of motivates me to not hire anyone. But I have to reasonable and realize that one day I cannot do this one my own forever. So how do I find a good employee who will represent my business the right way? I can read all the articles on human resources I want. But the question I have to ask myself is: Can my pre-selected candidates cut the mustard?

If I used the “7 C’s of Hiring, my candidate for my administrative support would fit the bill. She is competent as an administrative assistant and has held several positions that were comparable. Also she is capable, committed, and is full of character. I used to work with her some years back, so I know that we would be compatible. We share some of the same personal and professional values; establishing a company culture with her would be fairly easy. Compensation would be the only thing that would keep us from working together in my business. I would not be able to pay what she is worth in the beginning, but I would want her to know that I have a great future in store for her.

However, one cannot scratch out a living on empty promises. For me, this means I have to market my butt off to boost my revenue streams in order to hire her.

If you are thinking a team to help you run your business, should consider more than 7 C’s. Below are 9 questions you should ask when deciding to recruit employees. These questions are from Get the Right People by Steve Hunt and Susan Van Klink.

1. What types of jobs are we (or am I) hiring for?

2. How many people are needed and when will they be needed?

3. What sort of people should be hired? What characteristic do they need to have model employees?

4. What roles will other employees (if any) will play in the hiring process?

5. How will we (or I) source (or find) candidates?

6. How the candidates be selected?

7. How will new employee be trained and developed?

8. How will employees be kept after they are hired?

9. How will success be measured and improved upon over time?

Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being fluent in English instead of “Accountant-ese”.

The above quote struck a chord with me. I always remembered wanting to be an accountant. But I don’t remembering receiving an accountant “dress-up” kit as a present when I was a kid. I can make two guesses as to why no one wants to “play” accountant. One, toy makers didn’t see it as a profitable product line. Two, one cannot “play” accountant, you have to be one. Accountants and CPAs are expected to be ethical, knowledgeable, reliable, and financial experts. It’s hard to put all of that in box for $14.99.  It’s also hard to pick an accountant from a list or a Google search.   

I recently went to an intimate breakfast networking event consisting of 14 people. After everyone gave brief introductions, we chatted amongst ourselves about our businesses and our goals. Another entrepreneur told me something I couldn’t believe. Before his current accountant (which he gloats about), he had fired 4 other ones. As an accountant, that is a red flag in some cases and a possible warning sign of a difficult client. His decision to change accountants could have been prompted by disputes of fees, services rendered, organizational goals (also known as creative differences in the music industry), or just bad communication. But after talking to him, I knew he was not a “bad” client. He just didn’t know what to look for in an accountant.

 I have set a clear set of expectations for presenting myself to potential clients and servicing current clients. My 6 expectations are:

1). Understand the facts of the person, family, or business and use those facts to provide or create services within my scope of professional experience and education.

2). Show commitment by honoring all scheduled appointments and meeting deadlines.

3). Become educated about the factors (social, economic, or financial) that impact the client.

4). Effectively communicate my understanding of the client’s position and create attainable goals together.

5). Maintain a relentless level of motivation to stay educated, informed, and trained due to changes in the accounting industry, the financial climate, and technology.

6). Be genuine and sincere to the point that the client understands that not only do I work for them, I advocate for them.

But what if, as an entrepreneur, a small business or an individual, you do not meet someone like me? Would you be able to spot a good accountant or CPA from one that sort of lacks luster?

Here are some things I suggest you do when “shopping” for an accountant:

1). Ask another business owner, entrepreneur, or someone you trust for a referral. Accountants and CPAs depend on word of mouth advertising.

2). Do an informal background check- Search for the professional on Google, Facebook, LinkedIn, and Twitter. Read reviews and see what they are putting on the web.

3). Develop a list of questions to ask. May I suggest a list similar the ones listed below?

                https://www.smallbusiness.wa.gov.au/assets/Uploads/10-questions-accountant-final.pdf

http://taxes.about.com/od/findataxpreparer/a/tax_accountant.htm

http://www.inc.com/magazine/20061101/handson-smart-questions.html

4). Bring your most current financial statements or receipts to the first meeting. Explain why you are coming to them and that you need help understanding your finances better. Ask them if they see any areas where improvement is needed and ask them to explain why. If they cannot identify any areas that may need attention, just leave.

5). Ask for references. Any accounting or finances professional should have contact information of at least 3 people who are willing to vouch for them.

There is an article on Entrepreneur.com that also outlines expectations you should set for a bookkeeper. It is also listed in the free resource center of my website. Personally, I think that these expectations are applicable to anyone in the financial industry that you or your business may come across. This includes but not limited to, accountants, bookkeepers, business bankers, CPAs, financial advisors, insurance agents, and tax preparation personnel.

Do you have a horror story you would like to share about dealing with an accountant or some other financial professional? I would LOVE to hear it!

Thanks for reading!!!

Jéneen R. Perkins is a freelance accountant and consultant serving entrepreneurs, families and small businesses. She prides herself in being fluent in English instead of “Accountant-ese”.