5 Questions to Ask Your CPA When You’re Starting a Business

5 Questions to Ask Your CPA When You’re Starting a Business

Your business plan may be in order, your lease agreement in the works and your pitch to potential backers honed to perfection, but if you haven’t spoken to your CPA in depth about your business plans, you’re missing crucial information. For many small and mid-sized business owners, the enthusiasm for creating a new business overshadows more mundane concerns about cash flow, loss prevention and taxes. It’s worth investing the time to meet with your CPA before you take any major step toward opening; when you do, put these questions on your list of things to ask.

“What’s the best way to set up my company?”

You have many avenues available to you for your fledgling business, including incorporation or becoming an LLC. An attorney’s advice is essential here, but so is your accountant’s. Your company’s organizational status has far-reaching implications for everything from taxes to financial liability in the event of a lawsuit, so you should involve your accountant in the decision process too.

“How can we reduce expenses?”

Established companies have had years or even decades to learn how they can save. Your accountant can draw on these firms’ experience, combine it with their own expertise and suggest innovative ways to cut costs while maintaining the high standards of service that help make your new company successful. For business owners, choosing where to economize and where to invest can be a challenge, but your CPA will give you guidance.

“What can we do to improve our cash flow?”

Without careful regulation of the funds moving into and out of your company’s coffers, you can’t establish your break-even point, much less achieve it in the timetable you’ve set for your business. Improving cash flow seems simple on paper; increasing profits while investing wisely is at the heart of any sound financial strategy, but your CPA can give you practical advice on the specifics of creating a healthy cash flow. With good investment advice, your break-even point will be closer than you expect.

“How can I protect my business from theft, fraud or fiscal mismanagement?”

Newlyweds never enter into a marriage expecting a divorce, yet any lawyer can tell you that a prenuptial agreement is a wise financial decision for people with significant assets. By the same token, you expect your backers, partners and personnel to be scrupulously honest and as passionate about the business as you are. In the overwhelming majority of cases, you’re right, and your faith in others will be rewarded well. The rare cases of billing fraud or company theft, however, can do untold damage to your business and your trust. Ask your CPA about internal controls and oversight that will minimize your chances of becoming a victim. Even if you have complete trust in your business partners, following best practices will make future tax examinations painless.

Not all issues are deliberate theft; mismanagement accounts for billions of dollars in losses each year. Having an accountant on your side can help safeguard you and your personnel from making costly errors in record keeping and financial management. When you entrust your company’s financial health to an accountant, you free yourself to focus on growing your business rather than fearing problems that could shrink it.

“How well can the company weather a recession?”

Although the economy is strengthening steadily, recovery from the recent recession has been slow. For smaller companies, having the funds to endure a lengthy period of stagnation could make the difference between opening new branches and closing your doors entirely. Working with your accountant to create your safety net ensures that you give your business its best possible chance to succeed.

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