A Small Business Owner's Guide to FLSA rules

As a small business owner, it's a big part of running your company to be current with fair labor laws and operational compliance - on top of everything else you have to do!  Instead of putting more on your plate, why not just have a reliable team of experts in your corner to ensure you're up-to-date with all your payroll compliance needs? From the HR Blog at Fuse, here are a few basics on Federal Labor Standard Act regulations.

What is FLSA coverage? Who is covered?

The Fair Labor Standards Act covers certain employees entitled to labor law standards like overtime pay and minimum wage. Employees with FLSA coverage have FLSA non-exempt status. Employees without FLSA coverage have FLSA exempt status. 

Employers pay exempt employees for the job duties they perform, not the hours it takes them to do the work. Therefore, exempt employees are not eligible for FLSA coverage and are not entitled to certain labor standards like overtime pay and minimum wage. There are several considerations that determine employee FLSA status including salary basis, salary level, and duties performed. 

How do you define FLSA status classifications?

FLSA NON-EXEMPT: The provisions of the FLSA cover non-exempt workers for minimum wage standards, overtime pay, and other labor standard protections. Employers must pay their FLSA non-exempt employees the federal minimum wage (at least) for hours worked. For all hours worked over 40 hours in a workweek, the employer must pay non-exempt employees overtime (time and one-half the regular rate of pay).

FLSA EXEMPT: Unlike non-exempt workers, FLSA coverage does not protect exempt workers. Employers pay exempt employees for the job they do, not the hours it takes them to do the work. Simply put, exempt employees are exempt from coverage.

In some cases, other federal labor laws override the FLSA. As a general rule, if another federal labor law governs a job, the FLSA does not apply.

How do you determine FLSA status?

First, you should determine whether the worker is an employee or independent contractor. If you define your workers incorrectly, you could be liable for unpaid taxes and fines.

The IRS provides three Common Law Rules for determining worker status. Is the worker an independent contractor or employee? Ask these questions:

1. Behavioral: Does the company control or have the right to control what the worker does and how the worker does his or her job?
2. Financial: Are the business aspects of the worker’s job controlled by the payer? (these include things like how worker is paid, whether expenses are reimbursed, who provides tools/supplies, etc.)
3. Type of Relationship: Are there written contracts or employee type benefits (i.e. pension plan, insurance, vacation pay, etc.)? Will the relationship continue and is the work performed a key aspect of the business?

If the answer is ‘yes’ to these questions, your worker is probably an employee, not an independent contractor. Though, the IRS says there is no magic formula that determines status. The most important thing to look at when identifying a worker is the entire relationship between the worker and employer. Then, document all information about this relationship.

Once you have determined that your employees, you must now identify their FLSA status: exempt or nonexempt.

There are several considerations that determine employee FLSA status including salary basis, salary level, and duties performed. In order to determine employee FLSA status classification, an employer must answer the questions about the employee and his or her duties. The Department of Labor calls these questions the FLSA exemption test.  

FLSA Exemption Test

To classify employee FLSA status, you must answer the following questions:

1. Does the employee earn a salary?
2. How much does the employee earn per week or per year?
3. Does the employee’s role require certain responsibilities or functions that the Department of Labor considers exempt duties?

While there are a few exceptions, employees must meet all three of the tests above to be considered exempt from FLSA coverage (meaning NOT covered by the FLSA). There are some exceptions, however, where other federal labor laws override FLSA coverage. The FLSA states that, as a general rule, if a job is governed by another federal labor law, the FLSA does not apply. 

An employee passes the FLSA exemption test if:

• The employee receives pay on a salary basis.
• The employee earns at least $23,600 per year or $455 per week. (If the DOL's Final Rule takes effect, the threshold will increase to $47,476 per year or $913 per week.)
• The employee performs exempt job duties.

The DOL’s exempt duties typically include these roles:

• Executive
• Administrative
• Learned Professional
• Creative Professional
• Computer Professional
• Outside Sales

Salary Basis Test

Is the employee paid on a salary basis?

An employee paid on a salary basis earns a guaranteed minimum amount of payment for any amount of work done in a given week. This minimum payment includes accrued PTO days for vacation and sick days. Salaried employees may earn above the guaranteed minimum amount of pay through bonuses or other incentives but they may never earn less. 

There are permissable and impermissable reductions in salary basis level for employees. Permissable reductions could include docked pay due to disciplinary suspension or an employee taking more sick/personal days than he/she has accrued. This does not affect an employee's FLSA exempt status. If an employer docks an employee's pay for impermissable reasons (and the employee does not reach the guaranteed minimum amount of payment), it would have an effect on that employee's FLSA status and the employee would be classified with FLSA nonexempt status. 

Salary Level Test

Does the employee earn above the salary threshold? 

If an employee earns a salary above the FLSA threshold of $23,600 per year ($455 per week), the employee is exempt from overtime pay and other FLSA coverage. Remember, if the DOL's new overtime rule takes effect, it will increase this threshold to $47,476 per year ($913 per week).

Duties Test

Does the employee perform "white collar" exempt duties?

The Department of Labor determines exempt duties based on the primary duty and other duties the employee does in his or her job. This is not determined by the employee's job title or description but by the actual work performed. White collar exempt duties typically fall under roles such as executives, administrators, and other professional positions requiring certain degree levels or high-level work.

“Primary duty” as stated by the Depratment of Labor means the principal, main, major, or most important duty the employee performs. Determination of an employee’s primary duty must be based on all the facts in a particular case, with the major emphasis on the character of the employee’s job as a whole.

Executive Exemption

The Executive Exemption includes the following responsibilities:

• Regular supervision of at least two or more other full-time employees.
• Management as the primary duty of the job.
• Has input in other workers' employment such as hiring, firing, and promotions.

Some examples include CEOs, mid-level managers, and shift managers.

Learned Professional Exemption

The Learned Professional Exemption includes primary duties which require advanced knowledge in order to perform including:

• Consistent exercise of judgment and discretion
• Advanced knowledge in the field of science or learning (including law, medicine, accounting, theology, actuarial computation, teaching, architecture, pharmacy, and other occupations distinguished from mechanical arts or skilled trades)
• Advanced knowledge acquired by a prolonged course of specialized instruction.
• Required to analyze, interpret, or make deductions from varying facts or circumstances. 

Note: The DOL states that advanced knowledge cannot be attained at the high school level.

Some examples include lawyers, doctors, teachers, accountants, and clergy.

Administrative Exemption

The Administrative Exemption includes the following primary duties:

• Office or non-manual work directly related to business operations or management
• Exercise of judgement and discretion 
• Support production or line employees and keep the business running without engaging in the production or sales of the actual product or service of the business.

Some examples include Human Resources, Payroll, Benefits Management, Marketing, Public Relations, and certain computer-related jobs. Read more about the FLSA Computer Exemption here.

FLSA and overtime rules FAQs

What is Back Pay?

Back pay is a retrospective payment relating to a prior pay period. This typically happens due to salary increase or incorrect rate of pay in the cases of minimum wage and overtime pay.

Here is a guide from the Department of Labor on FLSA methods employees may take to recover unpaid minimum wage or overtime pay:

(1) The Wage and Hour Division may supervise payment of back wages.

(2) The Secretary of Labor may bring suit for back wages and an equal amount as liquidated damages.

(3) An employee may file a private suit for back pay and an equal amount as liquidated damages, plus attorney's fees and court costs.

(4) The Secretary of Labor may obtain an injunction to restrain any person from violating the FLSA, including the unlawful withholding of proper minimum wage and overtime pay.

If an employee has received any back pay wages under the Wage and Hour Division or the Secretary of Labor has filed suit to recover lost wages, the employee may not bring suit under the FLSA.

What is considered work?

According to the FLSA (and the courts), “work” includes all time spent performing job-related activities which (a) genuinely benefit the employer, (b) which the employer "knows or has reason to believe" are being performed by an employee, and (c) which the employer does not prohibit the employee from performing. These can include activities performed during "off-the-clock" time, at the job site or elsewhere, whether "voluntary" or not.

What is overtime?

FLSA sets a threshold of hours to be worked in a single seven-day workweek at 40 hours. Any time worked over the threshold is considered overtime. Some jobs like, medical or government, may have different thresholds.

When should overtime be paid?

Unless an employee is exempt from FLSA coverage, an employee must receive overtime pay at the rate of time and one-half the regular rate of pay for any amount of time worked over 40 hours in a single workweek. Overtime pay is due in the corresponding pay period for which the overtime work was performed.

Is it illegal to work ‘off-the-clock”?

Yes! Any work performed off-the-clock is illegal. Workers should be paid for any hours worked, whether or not that work is counted on a timesheet. Even work that is not specifically requested but allowed must be compensated. Some of the most common types of the off-the-clock work include:

• Preparation like prep work to open a restaurant before a shift begins or transferring equipment to a worksite.
• Post-shift work that “should have” been completed during the time of the shift.
• Rework a project to correct errors or when project objectives change.
• Administrative work such as paperwork or follow up, even employee training.
• Waiting for work when nothing is immediately available and workers are required to wait for a task.

Under the FLSA Statute of Limitations, how long does an employee have to file a claim for unpaid overtime wages?

With the impending changes to overtime rules, employers and HR managers should be familiar with the rules of FLSA procedures, specifically the FLSA statute of limitations. Do you know how long your employees have to file a lawsuit for unpaid overtime wages?

The basic answer is two years-to-date after the wage violation, unless the employer willfully violated the FLSA, in which case the employee has three years to file.

If the employee experienced ongoing wage violations (not just one time), he or she will only be able to recover unpaid wages (called back pay) for the two years prior to filing the claim.

What is the difference between a wage claim and a lawsuit?

Employees may file a wage claim with the Wage and Hour Division of the DOL and, in some states, employees may be able to file with their state department of labor. A claim does not involve the court system, whereas a lawsuit does. If the claim cannot be resolved, the employee may file a lawsuit—if there is still time under the FLSA statute of limitations. A lawsuit may occur if the claim could not be resolved or if the claim was impractical, in which case an employer may take the suit to court.

Note that some states have different requirements for filing wage claims. In Delaware, for example, employees must file wage claims at least 90 days before the FLSA statute of limitations ends. In New Jersey, employees may claim wages worth $30,000 or less.

FLSA changes to overtime rules have consequences for many businesses in the U.S. Human Resources needs to know all the ways employees may claim back pay for overtime or off-the-clock work and what they could be entitled to under the FLSA statute of limitations.

The original article can be found here!

Upcoming Tax Deadlines for Small Business & Individuals

October is a big month for Small Businesses and Individuals alike!

Monday, October 16th

• C corporations: File calendar year Form 1120 if you timely requested a 6-month extension
• Individuals: File Form 1040, 1040a, or 1040EX if you timely requested a 6-month extension 

Tuesday, October 31st

• File Form 720 for the third quarter.
• File Form 230  and pay tax on wagers accepting during September
• File Form 2290 and pay the tax for vehicles first used during September
• File Form 941 for the third quarter
• Deposit FUTA owed through sep if more than $500 

The Small Business Owner in One Infographic

A great overview of what the small business owner deals with every day! They are pulled in a million different directions on a daily basis - putting out fires, daily operations, employee management, customer service, overworked and not enough time in the day!  According to this infographic from Small Business Trends, 39% of owners find paperwork to be the biggest time waster.  However, it's a necessary evil that no one escapes from! Make it easier on yourself and hire an accounting firm that has your back!

Tax Options for the Self-Employed

Photo by Bonnie Kittle on Unsplash

From the U.S. Small Business Administration comes this insightful article on how to manage Self-Employment Taxes and the options those individuals have.

Self-Employment Tax Wrinkles
By BarbaraWeltman, Guest Blogger
Published: February 14, 2017
Updated: February 21, 2017

Individuals whose businesses are incorporated do not have to think about self-employment tax. Any salary they take from their corporations as owner-employees are subject to FICA taxes. In contrast, those with other types of business entities—sole proprietorships, partnerships, and limited liability companies (LLCs)—are not employees; they are self-employed individuals. As such they meet their Social Security and Medicare taxes obligation through the payment of self-employment tax.

Self-employed individuals pay what amounts to the employer and employee share of FICA tax; the employer share is deductible. In other words, they pay 15.3% (comprised of 12.5% for Social Security tax and 2.9% for Medicare tax). The self-employment tax is applied to net earnings from self-employment, although only net earnings up to an annual threshold ($118,500 for 2016; $127,200 for 2017) are taken into account for the Social Security tax portion. In basic terms, net earnings from self-employment are income minus expenses. It sounds simple enough, but there are some ins and outs that may impact your payments.

$400 threshold

While FICA taxes apply to the first dollar of wages paid to an employee, there is no self-employment tax due if net earnings from self-employment are less than $400.00. So a self-employed individual with only losses for the year, or someone with a modest sideline business, may be below the threshold for self-employment tax.

However, if net earnings are $400.00 or more, then the tax applies to all net earnings. There’s no exemption for this amount.

Optional payments

Self-employed individuals who have modest earnings may want to voluntarily pay self-employment tax. The reason: This enables such individuals to earn Social Security credits, which translate into higher benefits in retirement.

There are two optional methods for figuring earnings: one for farmers and one for all other self-employed individuals (nonfarm optional method). The farm optional method applies for 2016 returns if gross farm income was not more than $7,560 or net farm profits were less than $5,457. The nonfarm optional method can be used if net nonfarm profits were less than $5,457 and also less than 72.189% of gross nonfarm income but you had net earnings from self-employment of at least $400 in two of the prior three years. The nonfarm income optional method cannot be used more than five times by a self-employed individual

Determining self-employment income

In most cases, it’s easy to know what is or is not self-employment income for purposes of the self-employment tax. But there continues to be confusion about certain types of payments. Here are some recent matters concerning this issue:

• Payments for past performance. A former employee received a payment resulting from 34 years of services for a company. The IRS said it is subject to self-employment tax because there is a nexus between the income received and a trade or business. A court said the same thing for retirement payments made to a former Mary Kay sales person.
• Separate lines of work. A plastic surgeon who conducted his medical practice through a single-member professional limited liability company (PLLC) also had a minority interest in a limited liability company that ran a surgery center. The Tax Court said that his earnings from the surgery center were not subject to self-employment tax because he was a mere investor here; the activities did not have to be grouped as a single activity. He did not manage the center or have any day-to-day responsibilities there.

It should be noted that the IRS has yet to issue regulations explaining the extent to which a member’s distributive share from an LLC is subject to self-employment tax. This issue is on the IRS’s Priority Guidance Plan for 2016-2017.

Final thoughts
Self-employment tax must be taken into account in figuring estimated tax payments, and the first estimated tax payment for 2017 is due by April 18, 2017. Self-employed individuals should work with a tax professional to make sure this tax obligation is being handled properly.

National Payroll Week Offer for Small Business

We are continuing to expand our services even broader to be THE full-service small business accounting firm preferred by RVA!  Payroll is a must with most small businesses and also one of the biggest hassles.  A time-consuming and often costly task that won't go away week after week.  Which is why, in honor of National Payroll Week (September 4-8), we will be offering a special promotion to new Payroll clients and those that refer them to us!

New Clients:

• If you sign up before September 30th your one-time setup fee of $150 will be waived!

Referrals:

• If you refer a small business to us for Payroll Services and they sign up by September 30th, we will send you a $50 rebate check!

We work with our clients to maintain a payroll system that gets our clients as close to a “push button” payroll as possible.

Our clients submit their employee hours, change in pay or new hires in a variety of ways and combinations.  We’re set up to work with them all: e-mail, fax, phone, mail, online entry, and even by stopping by our Richmond office.

Employers have online access to a variety of reports and activities.  Employees have online access to their individual pay stubs and W-2’s.  Everyone can pick up the phone and get a prompt and professional response to any payroll related question that arises.  Here are many of the commonly used features that we offer:    

• We can receive and distribute information via an online portal, e-mail, phone, fax, or in person at our office
• Pay employees with paper checks or direct deposit
• Automated filing of all quarterly and annual reports
• Automated payment via bank draft for tax remittance
• Both you and your employees have access to custom online dashboards
• We handle all types of employee deductions including pre/after tax health insurance, employee advance repayments, garnishments
• Tip reporting
• Compliance with tip-to-minimum

Basic Fees and Pricing:

$150       Setup Fee

$125       Monthly Payroll

$155       Semi-Monthly/Bi-Weekly Payroll

$195       Weekly Payroll

$3           Per employee, per month fee for total monthly employees over 10

$50         Annual W-2 base fee

$7           W-2 fee per employee 

The Many Hats of an Accountant

There are so many facets of an accountant's role in Small Business, the first of which is to get to know yours!  Understanding the different needs of different small businesses is vital to our role in helping them be successful - there is no one-size-fits-all solution as you can read about in the unique solutions we found for Paisley & Jade.  This article sheds light on the many ways we can help you!

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It's a Bird, It's a Plane: The Four Financial Superheroes That Will Benefit Your Small Business
By: Bryce Welker
Forbes.com

Accountants are no longer confined to “bean-counting” tasks. The days of pocket protectors and short-sleeved shirts with ties are long gone. Now, accountants are viewed as superheroes (or violent hitmen if you’ve seen the Ben Affleck movie, The Accountant) who save businesses from financial risks and lead monetization efforts.

Having an accountant by your side as you make business plans for the future is the best way to ensure you are protected from any potential financial dangers. An accountant’s detailed knowledge of trends or tax laws, and his or her fiscal expertise, in general, will take down any villainous threats that could be looming on the horizon.

Not all businesses need a traditional accountant but having someone on your team who really knows finance can help you in a variety of ways. They can act as an advisor who can improve ineffective operational systems that cut company margins. If you are showing quarter-over-quarter growth, you may not be aware of any waste in the design of company procedures. An expert in money management will be able to easily spot inefficiencies and find ways to lower expenses or increase sales.

I realized my accountant was my hero when I began to have more and more time at work after delegating to him. Even though I had accounting knowledge, I needed to concentrate on running other areas of the company. As a CPA and CEO, I knew I had an advantage over other CEOs when it came to financial planning, but I didn’t want to devote too much of my workday to those tasks. An accountant can help with anything from preparing client proposals to pinpointing risks in need of mitigation. A skilled accountant can find missed deductions or help avoid a costly audit by carefully preparing tax filings. And with the changing times, accountants’ roles are also evolving every day.

The Changing Role Of The Accountant

Obviously, key accounting tasks like bookkeeping remain a focus. But technological advancement has prompted a shift away from strictly dealing with numbers to providing broader services that not only calculate, but also analyze. Now, accountants can act as specialists in many areas of business, and clients are welcoming this type of support.

Not all accountants wear capes and wield calculators. Let’s look at some of the undercover financial superheroes:

1. Business Analysts: Accountants are constantly working with data, like the company’s profits and losses. This data is one part of a larger puzzle. Look for a specialist who has the ability to see the details and the bigger picture. The powers of a business analyst can help you synthesize the company’s data and determine how different initiatives fit together. A good business analyst needs to have a strong background in accounting and a knowledge of programming languages like Python.

2. Entrepreneurs: Throughout an accountant’s career, they will experience different business needs and meet all sort of clients. An accountant will start to see the gaps for products or services that don’t exist. And that’s exactly what happened to me: I was a CPA and entrepreneur when I saw a niche that had a need. By having a strong understanding of financial implications when starting a business, accountants can become very successful entrepreneurs. So if you have aspirations to become a entrepreneur, start with a foundation in finance.

3. Investor Relations Specialists: Accountants make great investor relations specialists because of their background in finance and their ability to quickly understand and strategically communicate all elements of the company to different audiences. Look for an investor relations specialist with top-notch communication, analytical and reporting skills if you struggle with clear communication between your company and investors. Not all businesses need this type of specialist.

4. IT Specialists: Like many other things in this world, a lot has changed with technological advancements. Software and information systems play a critical role now more than ever. And in order for any business to be efficient, they need to integrate IT into their business. An accountant's knowledge and experience with multiple IT systems can offer companies valuable insight that can increase efficiency. IT specialists can advise and guide a business on its IT choices and ultimately save the company money by creating more effective systems.

You might not think you need an accountant in the traditional sense. But there are so many ways financial know-how can benefit your company. A CPA will be able to fit into most positions, given their experience and expertise. Even if you don’t have an immediate need, consider opening a line of communication with a CPA who you may want to bring on in the future, at least part time. If your business is growing, it's a smart choice.

10 Questions to Ask Your Accountant

A few of the questions from this article are about how the client can accommodate the accountant. At Accounting Works, we more often than not work the other way around.  Small businesses are so important to us, (in fact, we are a small business ourselves) that we know there is not one template that fits all of our clients' needs.  Working with clients on their current state of affairs as well as reaching toward future business goals is as important to us as it is to you!

10 Questions to Ask When Working With an Accountant

By Kim Lance Shandrow
Entrepreneur.com

Solely relying on free or inexpensive online small-business accounting tools instead of investing the services of a trained professional accountant can be a costly mistake that entrepreneurs make all too often. Don’t be one of them.

Springing for a licensed accountant can be worth every extra penny you spend, says ff Venture Capital chief financial officer Alex Katz. A qualified, certified public accountant (CPA) can tip you off to potentially irreversible financial missteps and brand new tax savings opportunities that you might not know exist. And we doubt most barebones digital accounting solutions could bring red flags like these to your attention as effectively as an accountant.

When you do invest in the services of a reputable accountant, it’s important to know what to ask and when -- not only to be sure you’re getting your money’s worth, but also to ensure he or she helps you do what’s best for your business and your bottom line.

1. What’s the best way to contact you and how often should we be in touch?

This might seem like too simple a question, but clear, effective and frequent communication is the key to a healthy, beneficial relationship with your accountant. Establish early on how often you’ll connect, either in person, on the phone or online (via a video chat app like Skype, Google Hangouts or Facetime). Decide together if you’ll meet weekly, monthly or bimonthly.

2. How can you help me prepare for (and survive) tax season?

Untangling the time-sucking tedium of tax prep is often the number-one reason small businesses hire an accountant in the first place. You’ll want to ask yours which tax credits and deductions you should claim. Also ask him or her if there are any new tax laws you should take advantage of to maximize write-offs.

“Tax opportunities, such as the R&D credit, accelerated depreciation or panoply of state and local tax opportunities, including tax forgiveness and outright grants or refundable credits, can even be applied for as part of the tax return process,” Katz says.

He suggests that you get answers to all of your tax questions long before the April 15 filing deadline. To avoid the year-end rush, get your accountant involved in helping you gather all of the necessary accounting documents and data all throughout year.

3. What are some considerations I should consult with you about on an ongoing basis?

A skilled accountant should get to know you and your business well enough to regularly keep you aware of -- and swiftly and appropriately reacting to -- an array of factors that could effect your bottom line, for better or for worse.

Your accountant should be well-versed in several disciplines, “including but not limited to GAAP [generally accepted accounting principles], corporate and individual tax, retirement planning and financial planning," Katz says.

He or she should also be open to assisting you in weighing the financial ramifications of certain decisions, like whether or not to hire an independent contractor or a full-time employee, buy or rent an office space, or rent or lease a company car and much more.

Your accountant should also work collaboratively with you in a way that makes it easy for you to consider and understand which actions you need to take now and in the future, ideally without the usual confusing accounting jargon. “If an entrepreneur in unable to develop that type of relationship with her accountant, it may be time to look for a new one,” Katz warns.

4. How can you help me grow my business?

A qualified accountant absolutely can help small-business owners expand over time, that is if have the right groundwork in place with you, Katz says.

To grow, you must start with a financial model that is “honest and built on a granular basis from the ground up.” Remember to update your plan on a monthly basis (or ask your accountant to) with actual results. Doing so can help you hone in on opportunities for growth in your market.

5. How can you help me clamp down on my cash flow?

Properly projecting your business’s cash flow is as essential as creating an effective mission statement and living up to it. Tedious, detailed flow projections aren’t easy to wrangle, but that’s what you have an accountant for.

Your accountant should be able to help you develop an organized, effective cash flow model that allows you to adjust your operations in ways that help you survive shortfalls, as well as improve receivables and manage payables.

6. What is my break-even point? 

Your account should be able to analyze a number of metrics to calculate whether your business is making a profit or a loss. Knowing your break-even point is crucial to determining your business’s pricing structure and profitability. Once your accountant helps you identify yours, you should have a strong estimate of how many products or hours of service you have to sell to cover your costs.

7. Can you assess the overall value of my business?

Your accountant should be up to the task of estimating your company’s fair market value in excess of your tangible assets. He or she should start by examining your financial plan and then execute a discounted cash flow (DCF) analysis, a common but effective valuation method.

Another way your accountant can help nail down your business’s value is by deeply understanding what you do and the industry in which you operate, Katz says. “In so doing, an accountant can help the entrepreneur understand which aspects of the comparable companies drive their value, and can work with the entrepreneur to steer the company toward maximizing those aspects of their business.”

8. Can you help me review and negotiate business contracts before I sign them? 

This is a common question for accountants, one that’s probably better to ask your attorney.

“An accountant should not practice law without a license,” Katz says. “They can work collaboratively with your attorney to add color and tax and commercial issues about which the attorney may not be experienced.”

9. What are some special considerations for my particular industry?

Businesses in different industries come with their own unique accounting issues. Your accountant should be knowledgeable about the various ones that specifically apply to yours.

For instance, if you own a startup that builds wearable tech, your CPA should be well-versed at identifying tax opportunities specific to the emerging technology industry, like potential R&D, facilities and training tax credits, as well as applicable manufacturing and sales tax exemptions, etc.

10. What are some common mistakes that I should avoid when working with you?

Not being 100 percent honest with your accountant is the worst mistake you could make, Katz says. “The truth will come out, either in the planning stage or in front of the IRS auditor.”

Failing to follow the advice of your accountant is another common mistake Katz sees. The whole point of hiring an accountant is for their expert advice. Thoughtfully consider it, then use it to make reasoned, balanced judgments.


Click here for the original article.