Before I say anything. I have to recommend to everyone who wants to open any type of business to take as many business classes as they can because things can get very complicated if you have no knowledge on how to run a business.
That being said, I did not take any classes unfortunately and in my ignorance I thought I could research my way through it or get advice from friends and family members who own their own business. That helped some, but I still feel overwhelmed and lost at times. I keep track of everything and have all of the required legalities done, but the main thing I am having difficulties in is taxes! I've even called my states IRS department and had help filling out my tax forms and they still sent me a bill and a statement saying they were filled out wrong. Hey, I bake cakes, I'm not very good with numbers basically-Although I know I need to be.
I really want to hire someone to do all of this for me because it's gotten to the point of it being no fun to make cakes anymore because of all the confusion and stress. Having 3 kids and running a cake business on top of it can get to be quite a task as you all know! For those who know what they are doing, I envy you!
Before I hire someone I have a few questions for anyone who can answer them. Please don't think that I am stupid, as hopefully someone else may have the same questions and I will save them the agony of having to go through what I am.
1. What exactly will the accountant do for me? Will they keep track of all my sales, taxes, receipts etc.?
2. Where would they conduct their business? Would they come to my office or would they do this all from their office?
3. How are they paid? Hourly?
4. Does anyone recommend a good one?
Thank you anyone who responds, as I know this is my own ignorance of thinking it would be easy. Hopefully hiring someone will make it a lot easier!
We used Quickbooks for regular bookkeeping. We paid an accountant to come to our office quarterly, review the books and check for errors/corections and do sales tax forms. He also did our annual taxes. We paid him a monthly fee which included these things. In our area, the cost was approx.$100./month. It relieved a lot of stress as we had full retail bakery and he would call with quarterly tax reminders and send the completed forms - we just wrote the checks and put them in the mail.
We also use QuickBooks...if you aren't familiar with accounting it can be a challenge to set up, but once you have it up and running all you need to do is enter your sales, expenses, and deposits. We use a rented kitchen so things are quite a bit easier than if we had our own retail bakery (no capital, no depreciation, etc).
I handle everything myself (I run the business side while my wife does the baking and decorating), and once you have QB up and running taxes are pretty simple. We have a more complicated structure than most (a multi-member LLC, so we had to file business taxes separately and send a 1065 to ourselves) but if you have a single-member LLC or a sole prop you should be OK recording your revenue and expenses in a schedule C on your personal return. It took me under 30 minutes to do our business taxes, since QB automatically exports data to TurboTax.
Before we started our business I did meet with an accountant once, I was still in business school at the time and wanted to make sure we didn't miss anything. If you do use an accountant on a regular basis and you have QB you should be able to handle everything over email (you can create an "accountant's copy" of your QB file). We found the accountant on Yelp.com.
Thank you both very much. I am actually exploring QB right now. Hopefully I can get the hang of it so I won't have to hire anyone. I appreciate your advise! : )
I eventurally hired an accounting firm and was SO glad I did. It was explained to me to be careful on the QB thing ..... crap in equals crap out so if you are weak in accounting knowledge, you can set the whole thing up wrong and end up with bad financial info. Trust me ... it's true. My hubby tried QB to keep my books and I had to pull an all nighter with my handy dandy Excel spreadsheet system to get the numbers pulled together for a bank meeting. (He was a great banker but didn't know anything about bookkeeping!)
I interviewed a number of bookkeeping/accounting folks. There are those who take all of your receipts and charge you by the hour (or an estimated monthly fee based on how many hours they might invest). the one i eventually hired had a great system and charged me a flat monthly fee. I had my bank statement mailed directly to them. They balanced my checkbook, tracked my sales, completed all of my tax forms (sent them to me to sign and mail the check), handled my payroll, and the price included doing our April 15th taxes. All I had to do was fill out the form they provide with my sales and cash expenses.
I highly recommend hiring an expert to do the things they are the expert at doing. Which leaves you time to do the things YOU are the expert at doing ... cakes!
If you are really accounting challenged and want to spend minimal money, use one of those old business record books at the office stores. Each transaction is recorded in the correct spot and the receipts can be kept, sorted, each month. if kept correctly, the accountant will be able to get everything needed.
I majored in cost accounting and I still hate every single moment of accounting. But nothing prepares you for being in business as well as accounting. I save my receipts, sort them, add up the totals quarterly, give the totals to the accountant, thereby spending only four days a year on accounting. I have no debt and my cost analysis is intricate. With the proper prep work, now I have very little left to do. I am over-simplifying this a bit, but if you get to the point where you know what you are doing, it gets pretty easy. And that book from the office store is very simple. An accountant could show you how to use it if you want to be sure.
Adult Ed evening classes usually have QB classes.
Thank you everyone for your responses. I see what you mean indydebi. I tried QB yesterday and I'm thinking I should not have put in all of my information from the past few months because I have lost a lot of receipts. Unfortunately. So now it looks like I got all of this profit and hadn't put any money out, which is so not the case. I am going to just start it fresh and then I am going to hire someone to do my taxes at tax time because I know it will be a challenge sorting through it all. Thanks for everyone's input!
Hi KellyJo -
I am a caker and a CPA. So I have a bit of insight into this for you.
I would start interviewing accountants soon, as most will offer you a free meet & greet appointment during the summer so you can see if you like them, but closer to the end of the year and tax time, we simply don't have the time to do those.
When looking for someone to do your taxes, you should look for either a CPA or an Enrolled Agent. Other than tax lawyers these are the only types of accountants allowed to represent you in front of the IRS in the case that you got audited. Basically in some states any person can put out a sign and call themselves a "Tax Preparer" without any training or experience. Also, you might ask at other bakeries in your area who they are using for accounting advice, an accountant with experience working with other bakeries might have some helpful insights into the business that you may not have thought of.
And you are right, QB is a bit tricky to set up. But I can assure you that once you have it set up, it is something anyone can do. So it is just a matter of looking at the costs/benefits and deciding whether or not it is better for you to spend X number of hours baking and increasing revenue or to spend those same X number of hours doing your bookkeeping and decreasing the cost by not hiring a bookkeeper. You might also look into the QB pro advisor listings http://quickbooks.intuit.com/product/training/local_expert.jsp as these people have all passed Intuit's training/testing process and know a lot about the software and how to help you get started.
Hope this helps and feel free to PM me if you have any questions.
Thank you so much Becca, I was finally able to get ahold of my Uncle who owns his own business and he is coming over this Thursday to help me set up quick books. He said the same thing you did about once it is set up, it is much easier to use. I'm crossing my fingers I am able to do this, as I would so much rather do it myself then pay of course! : )
I am an EA and I just recently started a gluten free bakery. I can tell you this--those clients that I have who took on bookkeeping on their own and had no clue what they were doing...it was a BIG MESS to clean up. It is amazing how quickly the books can go to crap.
Also--you didn't start a business to do the accounting side...you started the cake business to do cake. Accounting is time consuming.
In the scheme of things, 100, 200, 300 a month or quarter to do your books is worth it, if you are big enough to need an accountant, then dealing with what could be 1000s to clean up your books later.
That is just my opinion though!
Quickbooks is VERY easy to use...and that is why it is also VERY dangerous for someone who doesn't know what they are doing.
This is really good info! Saving this topic!