Small Business Owner – What to Bring for your First Accountant Meeting

An accountant can analyze the big picture of your financial situation and offer strategic advice. He or she produces key financial documents, such as a profit-and-loss statement, if needed, and files a company's taxes.

After tax season is over, an accountant can also act as an outsourced chief financial officer, advising an entrepreneur on financial strategies, such as whether to secure a line of credit against receivables when introducing new products.

Many small entrepreneurs can probably stick to outsourcing accounting or bookkeeping services for quite some time. The typical service business can often outsource its chief financial officer tasks and bookkeeping until its revenues rise well above the $1 million mark — or until it has about 30 employees. Until then, most businesses usually don't have enough work to keep a full-timer busy every day.

It's time to hire full-time help, though, when you're calling your accountant often enough that you wish he or she were in the office all the time. Bring in a full-time bookkeeper when your part-timer is spending two or three full days in the office and still falling behind.

Most new business owners find a staffing solution somewhere along the continuum that ranges from trying to go it alone to paying for full-time help.

  1. Financial Statements — A basic set of financial documents comprises a balance sheet, an income statement, and a cash-flow statement. For tax purposes, the income statement is the one most used by your accountant, but he or she will also want to see the company’s assets and liabilities.

  2. List of Capital Asset Activity — If you bought, sold, or disposed of any capital assets in the company during the year, you must account for it in your tax return. Your accounting software will allow you to print out a list of all of your capital-asset activity for the year, and this will give your accountant enough detail to classify any changes. If your listing does not specify the exact nature of the assets being bought and sold, make notes in the margin.

  3. Vehicle Log — If you sometimes use your own car for business purposes, you can claim a portion of the car’s operating expenses as a tax deduction against your business income.

    The IRS allows you to calculate this in one of two ways:

    • The detailed method starts with adding up all of your vehicle operating expenses (loan interest, lease costs, gas, repairs and maintenance, and insurance). Next, divide the miles driven for business by the total miles driven in the year and apply the resulting percentage to the operating costs. This is your allowable deduction.
    • The simplified method allows you to apply an IRS-mandated mileage rate to the total business miles driven in the year.

    Under both methods, you are required to keep track of your business mileage in a vehicle log. This can be as simple as jotting dates, descriptions, and miles into a blank notebook. Give this log to your accountant.

  4. Summary of Home-Office Expenses — If your home office is your sole place of business, or if you regularly meet clients or customers there, you can generally claim home-office expenses. These include a percentage of your utilities, repairs and maintenance, home insurance, and mortgage interest or rent.

    You may calculate your home-office deduction by:

    • dividing the square footage of your office space by the livable square footage of your house, or
    • dividing the number of rooms your home-office occupies by the total number of rooms in the house.

    Using either formula, multiply your total home expenses by the home-office percentage. Some accountants will ask you for all of your original receipts and others will only want the summary; be sure to ask which he or she expects you to provide.

    Note: Starting with the 2013 tax year, the IRS allowed an alternative simplified method of calculating home office expenses.

  5. 1098 Forms for Mortgage Interest and Property Taxes — Your mortgage company likely issued you a Form 1098 at the end of the year that summarizes your mortgage-interest and property-tax payments in the year. Your accountant may ask you for this form to claim the mortgage-interest deduction that all homeowners are entitled to, and he or she will also need them as part of your home-office deduction.

    If you carry multiple mortgages, be sure to provide 1098 forms for each one.