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[BizTalk] New Revenue Code & Taxes


#1

Hello! I’m a new member of the Orchid group and hope that this post
still falls within the boundaries of its intended discussion. This
is my first year in business and, having attended college for a
science major, I never took a business class. Economics has now
placed me in business. I’ve got 3 questions about bookkeeping in a
jewlery business that I hope someone can answer for me. Each book I
read confuses me on these points:

1)I read that the Revenue Code was altered this year, such that
businesses with less than $1 million/yr in gross receipts can use the
cash method of accounting. Is this true? Also, if this is true,
must I still use the accrual method for inventory?

2)If I were a corporation, rather than a sole proprietorship, I’d
transfer assets I owned before I went into business to the
corporation in exchange for consideration, such as stock. Is there
a way I can “officially” transfer asset ownership to my business and
"expense" the purchase(s) on my tax return?

I’m a small operator in my first year and really don’t relish paying
a consulting fee to a CPA just to ask a couple questions. Plus, I
figure I’m not the only small businessperson on the list, so
hopefully others will find the answers usefull. Thanks to all who
respond! Frank Romano


#2

Frank-

Congratulations on your new business. I hope you will enjoy making
and selling jewelry as much as I do.

As a long time business owner who has recently transformed her
business from a sole proprietorship to an S type corporation I cannot
over emphasize the importance of establishing a relationship with
both a business lawyer and a CPA now while your business is young.
The piece of mind they will offer you along with their professional
expertise is worth every penny you will spend. From the questions you
posted I think that even a brief meeting with a CPA would be well
worth your time and would really help you get your business off on
the right foot. The same goes for a lawyer to look over your business
structure and policies.

It is hard when you own a small business not to want "to do it all"
either for economic reasons or in my case reasons of pride. I did my
own books and taxes for years until I realized that I needed
professional help and I’ll tell you I am so happy that I finally came
to my senses.

Good CPAs and lawyers are not expensive. Look for ones that
specializes in small businesses or working with artists. They are out
there, I promise. Most will offer a free or discounted first time
consult. Don’t be afraid to interview several. Don’t be afraid to be
picky. Call your Chamber of Commerce or local Arts Council. Knowing I
have both a CPA and a lawyer on tap who know my business and have my
interests at heart is a real comfort.

IMHO too many folks wait until they have a legal or book keeping
problem to hire professional assistance. I think this is very bad
idea because it puts the person you hire at a great disadvantage.
And often one ends up settling for whomever is available rather than
the professional who is the best fits for your business.

If you want to chat further feel free to contact me off list.

Happy to help-
Amy