Building an Accounting Practice
Subject: Accounting Business Question
Mr. Kerstetter,I read some of your blog posts by reading up on tax strategies on the internet and found your blog and posts very informative and interesting to read through. My question is less accounting based than many of your other readers.I guess a little background might help first, I am a single dad and currently a CPA who was a financial auditor in my former life. Not even a year after I received my Masters in Accounting I found myself at the brunt of a fairly awesome child support dispute at the worst time possible (due to the state of our economy), it effected my work product and I lost my job. I decided not to waste my education and find a way to begin my own accounting business providing bookkeeping and tax services.Long story short I was able to mediate a successful workable support agreement with the mother which will allow me to move to Nashville to be close to my son and to attend a night law school to bolster my legal and tax background so that I will be able to offer additional services in the future and potentially save my a** in case I encounter any additional legal troubles in the future (I was not prepared for how fathers are treated in family court).Anyway, In the mean time I will begin the slow task of acquiring new clients in Nashville. My question is this, can you give me any good tips on how to attract clients. I use TaxACT as my tax software and have began familiarizing myself with Quickbooks Accountant and Pro. I have a few clients but they were acquired simply by luck almost. I have a basic fee structure but how do I know if this is competitive or if I'm under/over charging, I was used to billing myself out at $200 an hour at BDO Seidman but that seems a bit much for a new CPA on the block plus it was audit work. If you know of any good books I could read or could offer any advice I would be more than appreciative. Also, how did you go about getting your own domain address for your email? Is it expensive?Thank you for any help you can give, it means a lot.
I have discussed this a number of times in my blog; so you should search past postings.
I haven't changed my opinion that having an online presence, such as a blog, is the best way to develop a nationwide client base.
Giving free speeches to local service clubs is still the best way to grow a local client base.
Paying a marketing firm to steer clients to you is a waste of money. Those services are scams.
The right billing rate isn't an easy answer. I would probably start in the middle of the current rates for other CPAs in your area. That will give you room to raise your rates in future years as you become more proficient and the clients become more dependent on you.
In regard to the email address, most web hosting companies allow you to have 20 or more email addresses for each domain that you host with them. It's obviously a subjective issue, but I have always felt that someone is more professional who has an email address based on his/her own domain rather than using one of the freebie email services.
Good luck. I hope this helps.
I will definitely look through your blog posts for the information you mentioned. Thank you very much for responding so quickly!
I’ve lost track of the number of CPAs and tax professionals who have asked me for advice on building up a clientele. I always advise against paying those “marketing” firms that promise to attract new accounting and tax clients via their deceptive advertising. Those are scams.
I have been telling several people that doing a blog and showcasing what you know and how you feel about tax and business issues is the best way to attract new clients. In spite of the fact that I have made it known for the past few years that I am not accepting any new clients, I continue to receive requests from people to take them on as clients on practically a daily basis.
In fact, if blogs had been around in the early 1990s, I could have saved a lot of time driving around Arkansas, Missouri and Oklahoma presenting my Realtor seminars and built up my practice via the internet. That’s how I would do it if I were starting out in a new market today.
I mention these obvious points in conjunction with this article on CPA blogging from AccountantsWorld that Ohio CPA Dana Stahl forwarded to me. It has some excellent tips and creative ideas on how to overcome the “writer’s block” that scares most tax pros from undertaking a blog.
Accountants' Top Ten
David Letterman had his annual Tax Day Top Ten delivered by accountants last night.
Video from YouTube:
Top Ten Things I've Learned From Being An Accountant10. When you know the right people at the post office, it can be April 15 whenever you want (Phil DeFalco)
9. Wite-Out and 7-Up — surprisingly refreshing (Andrew Ross)
8. If you're confused by something on the tax form, just write "Huh?" (John Fodera)
7. You do the taxes; don't let the taxes do you (Richard Koenigsberg)
6. People will pay you a lot of money if you pretend to know how the tax code works (Adele Valenzuela)
5. The only thing more satisfying than getting a client a sizeable refund is the garlic shrimp scampi at Red Lobster (Doug Cohen)
4. Numbers is hard (Andrew Rubin)
3. After completing tax returns for 12 straight hours, your calculator starts talking to you (Sandra Bissell)
2. Always put your clients first... unless you get an offer to go on Letterman (Roger Levenson)
1. Women want me. Men want to be me. (Richard Cohen)
Closing the Information GAAP – Interesting look at plans to replace GAAP (Generally Accepted Accounting Principles) with IFRS (International Financial Reporting Standards) here in the USA. I always get a kick out of non-accounting people who fell for the stereotype of tax and accounting being so cut and dried as to be boring because nothing could be further from the truth. Tax and accounting rules are constantly changing and evolving and will never stop doing so.
Working with cash...
Subject: Cash TagsKerryCash tags, does cash have to be taken out of your business to be spent on expenses as cash. Or is all cash spent on expenses regardless of its source deductible as long as you have your receipts saved. Money from savings an example.Do you have to divulge the source of the cash to use the deduction?
If you are posting cash expenditures made for business related expenses, it doesn't matter where the cash came from, as long as it wasn't from unreported taxable cash income. It could be from personal or business accounts.
Depending on the overall size of the cash expenditures for the year, the level of documentation should coincide. Small amounts shouldn't be anything to worry about.
However, if you're getting into thousands of dollars, you need to be prepared to defend the original source of the cash in case IRS were to ever inquire about it. They actually have audit teams that examine people in businesses that deal primarily in cash to ensure that every penny is accounted for. Many of those people actually cut their own throats by reporting thousand of dollars more in personal and business expenses than the level of income they are reporting. There are plenty of classic cases of tax fraud where people are living very high on the hog, while reporting very small amounts of income on their tax returns.
IRS auditors are trained to start off from the premise that all money received is taxable income unless the person can prove otherwise. So if you do come into a large amount of cash that was a gift, inheritance or one of the few tax free sources, you need to be diligent in documenting this fact.
One of the best ways to document cash is with QuickBooks. Set up a bank account called Cash and show money going in and out just as you do with a normal bank account. Doing it that way would protect you from IRS accusations of having unreported income.
Good luck. I hope this helps.
Operating wih no accounting knowledge...
Subject: Transfers from personal checking into a business shown as income ???
I read your tips on Taxguru.org
I have quicken 2008
I have a business in florida selling equipment. I get paid a salary.
I also have a farm in Tennessee which a rent out
the problem is every month the farm loses money.
I ever overdraft or pull money from a line of credit or my checking account
This shows as income in cash flow reports.
how can the transfer go from my checking account > to the "Shareholder Loans." to the farm, and if its not income or expeses
what is it (a liability)?
I guess thats what gets it off the the income statement
If (should) the farm should have its own Quicken file
How does the income flow in and out of my personal checking into the farm when it needs money?
Sorry for the conveluted questions?
All of those questions involve very basic bookkeeping procedures.
You are way out of your depth in trying to set up and keep your own books without professional guidance. You should have a professional bookkeeper set up the Quicken, or better still QuickBooks, files to coincide with each of your tax returns and then either train you how to make the entries for your transactions or take on that task on an ongoing basis.
Your personal professional tax preparer should also be involved in the design of your books to ensure the ability to easily obtain the info s/he needs for each of the related tax returns.
The first one would be something appropriate, such as April 16: