Author Archives: Lance Hori

What Costs Can I Expect as a New Business Owner?

If you’re thinking of starting a new business, it’s a good idea to know what all the different types of costs that you will have as a new business.  Not having the proper understanding of the different types of costs and their amounts could put you out of business.  If you are thinking of starting a business I can help you estimate your income and expenses before you invest a single dollar.

The Hidden Costs of Doing Business

I will mainly cover the expenses that most people are going to overlook.  If you are planning on having employees, there are payroll taxes, including the employer FICA tax match, state unemployment, federal unemployment, worker’s compensation insurance and the cost of processing the payroll.

New Business CostsDifferent types of industries will require different types of insurance policies.  The most common types of insurance policies are general liability, auto, professional liability (errors & omissions), and worker’s compensation insurance.  Depending on the industry your insurance policy could dramatically vary in cost, and in some instances, the premiums could be much higher than expected.  One example would be a trampoline park pays a very high general liability premium due to the risk of injury, and framers pay a very high workers compensation rate due to injury as well.  Other industries such as interior design pay a very low workers compensation premium because they have very low risk in the workplace.

There are also professional fees including accounting, taxes and legal issues.  Some business owners would be able to perform most of the administrative work themselves, but in some circumstances business owners do not have the time to manage the business affairs and take care of administrative issues such as billing or accounting.  I can help clients by providing help with all different types of administrative work including insurance quotes, working with bank underwriters on loans, and other types of high level administrative work.

There are costs associated with setting up a business, and renewing the business every year.  There are also business licenses with the city.  Non profit 501(c)(3) organizations have to file a charitable solicitations permit each year and prepare a statement of functional expenses.

There are many different types of taxes businesses are subject to.  The list includes sales tax, restaurant tax, property tax, personal property tax, income tax, and IFTA taxes for trucking companies.  There is a cost of the tax itself as well, and the cost to prepare the returns or calculations needed to prepare the return.

Many businesses require more than just your standard accounting software to be able to do the invoicing, estimates, and time keeping.  There are also other business software programs that require an annual maintenance fee that can become significant.

There are information technology expenses.  If you have things go wrong with your computers, software programs, equipment, and email accounts you might need an information technology expert to help you figure out how to fix things.  Sometimes they are able to configure your systems so you can work faster and more efficiently.

Depending on the terms of your lease or rental agreement you might have to pay for utilities, common area maintenance fees and property taxes.  This is all in addition to your monthly rent, this is commonly referred to as a triple net lease.  Make sure you carefully check the terms of your lease and understand the related expenses before signing.

Starting a new business is a giant leap of faith.  Many business don’t survive the first year of being in existence, and that is because they did not have an accurate picture of what their expenses were going to be.  I can help you put together a projection that you can use to attain loans from banks, or help you feel better about the commitment you are making by starting a new business.  There is nothing better than being your own boss, so contact me and I’ll help you achieve your goals.

The Problem with H&R Block, Liberty Tax, and Jackson-Hewitt

The problem with H&R Block, Liberty Tax, and Jackson-Hewitt is that they have inadequately trained professionals, and that they overcharge for their services.  You also will likely not be able to meet with the same person each year.

Companies like H&R Block and Liberty Tax hold training seminars 12 weeks before the tax season begins.  They offer the classes as free training on how to prepare a 1040 tax return.  young professionalWhile the people are in training they are offered a job to work as a tax preparer.  After 12 short weeks, only breezing through each of the tax topics they are preparing returns for you.  Some of these people take the classes with the intention that they may be offered a position.

They even have the nerve to attempt to prepare business tax returns where they have absolutely no training on this matter.  They are only advised to review some of the examples that they have in their software.  They are not to turn away a business owner that is looking for a business return prepared.  This is malpractice, if there was a standard for tax return preparers, which there is none.

H&R Block and other franchised curbside tax return preparing companies oftentimes will charge you more for a tax return than if you would go to a CPA.  They charge on a flat fee based on the different forms that the software generates.  Even though they only had to enter one number for education expenses they might charge you $50 for that service.  The value of the service you are receiving is not even a quarter of what they are charging you.  You wouldn’t pay a high school student that has 12 weeks of training $100 or even $200 an hour.

The turnover at Liberty Tax and H&R Block is outrageous, because they might be able to offer one person a full time job at each location.  The rest of the tax preparers are found each year right before tax season.  The software they use is an in-house software that is below the standard for CPA’s in the industry.

As a CPA I have over five and half years of education, three and a half years of training in accounting and tax.  I have several years of experience behind me as a tax preparer.  I have taken the extensive CPA licensure exam and passed.  The exam itself is 16 hours long, and covers the areas of audit, accounting, tax and business.  I bill clients on an hourly basis.  If the return is simple you will not overpay.