Like a lot of naive new remodeling business owners, I chose my first accountant based on his price. That was, unfortunately, a costly mistake. A financial planner I started working with looked at my business’s first tax return and suggested I seek a new accountant. She even offered me a referral to someone who was already working with construction businesses.
The way that first accountant filed my tax returns for my first year in business caused me to pay about $5,000 more in taxes than I would have if I had only claimed my income in a different and entirely legal way. At $2,500 my second accountant was twice the price of the first. However, I quickly came to learn what I paid was actually an investment in my future and life, not an expense to my business.
How about you? Do you have a proactive accountant helping in ways so that you make more money and don’t pay more in taxes than you have to? Or do you have a historian? You know, someone who tells you what happened after it’s too late to do anything about it?
Take Ownership of Your Choice
Like many remodeling business owners, I did not have business training before I decided to become a remodeling business owner. And like most new business owners, I was naive. I thought remodelers made money wearing a tool belt and building things. My second accountant helped me see that a real business makes money by selling things at a planned profit.
He also shared that I should stop wasting my time and energy trying to find ways to cheat the government out of taxes. Instead, he suggested I spend that same time and energy growing a real business so I actually had to pay a lot more in taxes. That piece of wisdom really had an impression on me. It surely changed how I looked at my business, but it also changed how I looked at the professional accounting services that I could get, expect and then had to have for my business.
When was the last time your accountant called you to check in to see how things were going? If you are not getting proactive advice from your accountant, is it his/her fault or yours? If, as a business owner, you are not getting the help you need to ensure you are making money, then at tax time it will be your own fault when your accountant lets you know you lost money, again. If you are making money, will you wait to find out what you will owe in taxes, or will you strategically work with your accountant to use and invest your profits in ways that can reduce what you have to pay in taxes?
The choice is yours. Your decision will make a big difference toward your ability to retire someday, as well as the lifestyle you and your family will be able to enjoy when you get there.
Seek a Professional Who Thinks Like a Contractor
Making money is not easy. It requires knowing how to anticipate the costs of being in business and then using that information to properly price the work you sell. It requires the ability to track what you wanted to happen against what is actually happening. This way you can either confirm you are on track or identify you’re in trouble before it’s too late. Paying taxes on that money reduces what you get to keep; finding out you paid more in taxes than you had to makes giving up that money even worse.
Make sure you seek an accountant who can think and act proactively in support of your business. But, if like me you have or plan to have other income sources in addition to your business, I suggest you find an accountant who can also help and advise you with your whole financial picture. For example, will the income you make on your investment properties change how you should treat the profits at your remodeling business? Should those properties be in your name, your business’s name, a separate LLC or transferred to your children?
These are questions the right accountant should be making you aware of and helping you address if you want to keep more of—and even grow—the hard-earned money your entire financial package generates.
The Residual Effects of the Right Accountant
With the right accountant helping you and your business, you will definitely make and keep more money. The earlier in your career you find ways to do so, the more money you will have when you reach the horizon of your career. So, will you predict and cause the history you want for your business, or will you leave reporting what happened up to a historian accountant? |QR