Why Entrepreneurs Need CPAs When Creating a Business Plan
With the first day of spring behind us, the home-grown vegetable and gardening enthusiasts among us have likely started planning for this year’s garden. They have to time it right, so their seeds are not sown before the season’s last frost. The space must be plotted out so that one type of vegetable is not competing with another for nutrients. For an entrepreneur, starting a new business is similar to cultivating a garden. You will not only need a business plan in place before you dig in, but you will also need to nurture your venture with ongoing strategies that promote financial health and business growth.
Starting a new business can be hard work, but the right professional team can help you with a great deal of that effort. And a CPA is an integral part of that team. As you prepare to turn your ideas into a new venture, a CPA can help you cultivate a business plan that promotes tax efficiency and sound financial practices. As your business matures, your CPA can free up some of the time you spend on administrative functions so that you can refocus your attention on your business. Here’s a look at some key considerations for entrepreneurs starting a new business and how a CPA firm like L&H can help.
Choice of Entity & Business Formation
The entity type you choose plays a leading role in determining your legal risks, financial obligations, ownership structure, and personal and business tax requirements. Depending on your goals and the state laws where you intend to operate, you can organize your entity as a sole proprietorship, general partnership, limited partnership (LP), limited liability company (LLC), limited liability partnership (LLP), C corporation, or S corporation. Massachusetts state law permits the organization of all of these entity types.
How can L&H help? There is no one-size-fits-all solution. The right entity type for you will be based on your specific situation, including your personal and business goals. L&H can help you determine the entity type that is best aligned to your goals and provides maximum tax savings. Once you have chosen an entity type, we can help you navigate the business formation process, including the necessary business licenses and incorporation filings.
Accounting Methods & Capital Structure
When starting a company, especially when seeking venture funding, swiftly squaring away your accounting needs becomes critical. Based on your goals and needs and the challenges specific to entrepreneurial and emerging growth, you will need to properly balance your equity and debt through your capital structure and establish your business’s accounting basics.
How can L&H help? Our team has access to resources for entrepreneurs starting out, and we provide consulting services for funding and equity transactions that can help you optimize your capital structure. L&H can also help you determine the appropriate accounting methods, establish your year-end, set up the proper accounts, and implement systems, policies, and procedures that are best suited to your goals and needs.
Budgeting, Forecasting & Financial Estimates
When creating a business plan, entrepreneurs need access to in-depth industry statistics, economic and market trends, and benchmarking data to prepare forecasts and projections, maintain a balanced budget, and make accurate financial estimates.
How can L&H help? L&H can help you with a comprehensive financial plan, including a realistic budget based on your goals and needs. We can help you with direct or indirect costing plans, expense tracking, and preparing forecasts and projections.
Making Informed Business Decisions
One of the essential drivers behind business success is the owner’s ability to make data-driven decisions. A comprehensive understanding of your financial health goes beyond the bottom line. In addition to incorporating industry benchmarks and market data, business owners need insights on how to improve cash flow, their borrowing capacity, cost-cutting, tax savings, vulnerability to risk, and opportunities to improve productivity and operational efficiency.
How can L&H help? Our professionals provide comprehensive tax planning services that go beyond basic compliance. We help clients leverage opportunities to maximize their tax benefits and minimize their tax liability, and we provide representation before the IRS or state or local tax authorities. When we prepare financial statement compilations, audits, and reviews, we go the extra mile to ensure our clients understand what those numbers mean and how to glean actionable insights from the raw data. We can also assist by providing profitability analyses, operational reviews, and assessments of internal controls.
Contact Livingston & Haynes
L&H uses innovative ideas, technical skills, and industry knowledge to help entrepreneurs create a strong business plan from the get-go and ongoing strategies to maintain strong internal accounting, financial practices, and operational procedures that support business growth. Contact me today to get started.
by Wendi Haynes, CPA
Wendi Haynes, CPA, has extensive experience providing accounting, auditing and tax advisory for privately-held companies, including technology, entrepreneurial, and emerging growth, and nonprofit organizations, including human service organizations, charitable and grant-making institutions, cemeteries, foundations, social clubs, and fraternal organizations. She serves as Livingston & Haynes’ Managing Partner and has been with the firm for over 30 years.