Needing a business accountant

[seaboy4hire]

Hey guys! There is a chance I might be buying an existing business and I am going to need an accountant to help me go over the IRS fillings for the past 3 years at min. Can someone maybe suggest someone here in Seattle or very near by? Or maybe we have an accountant in the house who might want to lend his services? Thanks a bunch!

 

Hugs,

Greg

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[Guest bighugbearphx]

>...There is a chance I might be buying an existing

>business and I am going to need an accountant to help me go

>over the IRS fillings for the past 3 years at min. Can someone

>maybe suggest someone here in Seattle or very near by? ...

 

Greg, I'd suggest that you contact the local CPA society and ask for a referral to someone who deals primarily with SMALL businesses. (You don't want a large firm, where you are mostly ignored or shifted to lower-level staff, while the partners deal with their "bigger fish" clients.)

 

Be aware that looking at IRS filings, and even most financial statements, might not give you a true picture of the business' financial situation. Even if done accurately, at best they only give you the "what" but not the "why" of the situation, and businesses can often manipulate the results for a desired tax or presentation result. (I constantly see businesses that suddenly have a huge increase in gross income, and a decrease in expenses, when they start considering a sale.)

 

And, as they say in the car commercials "Your mileage may vary." Perhaps the current owner and/or his spouse spend full time in the business managing it, but the tax/statements don't reflect any compensation paid for that work. If you instead will be hiring a manager to run it, the entire cost of that person's salary, payroll taxes and benefits will be a negative adjustment to what your results will be. Conversely, perhaps the current ownership includes unearned payments to relatives or acquaintances, both in salary and benefits, that won't be a factor for another owner.

 

Even if the financial statements and tax returns are prepared by a CPA, don't put too much faith in that on the surface. Most tax returns and statements are based on "compiled" data, which is simply the representations made by the business owner, which the CPA doesn't have any duty to confirm. Only a "reviewed" or "audited" financial statement actually gives you some limited assurance that what you are reading isn't manipulated to get a desired result, and few small business can afford the fees involved for such work. (The accountant's letter that accompanies a set a financial statements will spell out the level of service provided.) Ideally, have your CPA get permission to not only examine the financial statements, but also the previous accountant's workpapers, source documents, etc., which would be much more valuable to you.

 

Also get a letter from the seller giving you permission to inquire about them to bankers, vendors, lenders, etc. to see if such inquiries raises suspicions about their financial stability. And keep in mind that, in most states, buying all of the assets of a business can come with a statutory lien for unpaid sales taxes and possibly other assessments. An attorney should be involved in the negotiations.

 

Good luck!

 

Bob

[seaboy4hire]

Thanks Bob for the advice! I know that if I looked at the papers I'd only see the surface and probably wouldn't see deeper into the numbers like a lawyer and cpa could. The owner just got back from vacation today so hopefully he'll give me a call tomorrow. The bf talked to him just before he left for vaca and said the owner (who we are on friendly terms with before knowing that he for sure wanted to sale) would prefer to work with us and sale to us then the two people that have approached him. So here is to hoping things go well within the next few weeks.

 

Hugs,

Greg

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[Epigonos]

Greg the one thing you might want to consider it that when your are looking for someone to help you with Federal and State taxes your best choice is most likely NOT a CPA. Keep in mind that CPA stands for Certified Public Accountant which means a glorified bookeeper. Now some CPA's do know taxes but MANY do not. When dealing with tax matters "only" seek out an EA. EA stands for Enrolled Agent. EA's must pass an IRS peparared three day exam which has a lower passage rate that most state bar exams. An individual can also become an EA without the exam if he or she has been an IRS auditor for ten years or more. EA's are liscensed to represent clients at IRS audits and in tax court. If the tax matter ends up in tax court most EA's will insist on working with a tax lawyer as well. CPA's know proper bookeeping proceedures, EA's know federal and state tax forms an how to apply them, tax lawyers know tax laws. Do be careful to use the best person for your needs. Good luck

[imrthr]

“Greg, the one thing you might want to consider is that when your are looking for someone to help you with Federal and State taxes your best choice is most likely NOT a CPA. Keep in mind that CPA stands for Certified Public Accountant which means a glorified bookkeeper.”

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My, oh my! Your critical post indicates that you got burned sometime in the past by a CPA.

 

Just as all lawyers do not know tax law and all doctors do not know surgery, many CPAs do not know much about income tax law because that is not where their interest or specialty lies. To besmirch a CPA because the CPA chooses a specialty that is not all encompassing is harsh, at best.

 

By the way, the passing rate for the CPA examination (for first-time candidates is about 5%). The passing rate for attorneys varies by State but is about 20% given best available statistics. The pass rate for the EA examination you discussed is about 25%.

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“EA's are licensed to represent clients at IRS audits and in tax court.”

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Enrolled Agents are NOT authorized to practice in the tax court unless the Enrolled Agent is also an attorney or takes and passes a separate Tax Court examination that allows for non-attorneys to practice in the tax court.

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Gregg, regardless of the individual you choose to assist you in your business venture, there exists a risk. That is something that goes with being an entrepreneur. Just remember, not all business risks relate to income taxes. Over time you will eventually find a good fit with someone who can guide you through with your business affairs.

[Guest bighugbearphx]

I am going to have to agree, for the most part, with Imrtr.

 

It is technically true that, after a CPA passes their exam (which includes a section on tax law), they technically never have to take another tax course again as long as they live. (Enrolled Agents, on the other hand, have mandatory annual update education on tax matters.) Some CPAs work in private industry, where they don't deal in taxes at all, so they don't need continuing education in taxes. As a matter of fact, they often have others prepare their OWN tax returns.

 

But a CPA who works in a public accounting firm, holding themselves out to deal with individuals and small businesses, certainly would need to keep current on taxes, since this is the major source of revenue generation in most small practices. In medium to larger practices, each CPA may specialize in a specific area, like taxation, public audits, forensic accounting, non-profits, etc., but they would simply direct questions they don't know to a partner at the firm who does specialize in that area of knowledge.

 

The reason why my reply specified a CPA (rather than an EA) is that most EAs do not have accounting degrees, and are not familiar with financial statement reporting criteria (e.g., the attestation differences between compilations, reviews and audits, what to look for in footnotes, etc.) A CPA should be able to reconcile the tax return to the financial statements, and it is the latter that will be more likely to provide a better picture of the real financial situation.

 

And I know this from working on both sides of the fence. I am an Enrolled Agent, with an Bachelors in accounting (and a few postgrad credits), who worked as Tax Manager of a local small CPA firm for 8 years. I've been in practice for over 30 years, and deal with all aspects of taxation. But most EAs do not have a background like mine, and their knowledge may be limited to just individual taxation.

[seaboy4hire]

Well got the currant lease agreement and the tax fillings for the last two years that he has been opened. Now it's time to hunt down those number crunchers and get the data that they might need to secure the deal. I've spoken with my banker who has known me for almost 10 years and she is she quite excited for me since she knows that coffee is my passion and what I love. I have all the faith in her that once the number folk do what they need to do she'll do her best to secure me the cash. One person who was trying to secure a loan was turned down by her bank which is good for me maybe. Here to continuing keeping my fingers and anything else I can cross crossed that things go well! Oh yeah I've contacted a friend who works for a law firm and asked if he knows any tax lawyers and accountants.

 

Hugs,

Greg

[email protected]

http://seaboy4hire.tripod.com New page for reviews http://www.daddysreviews.com/newest.php?who=greg_seattle Los Angeles June 28, 2007 One day only!CHICAGO June 29-July 2, 2007

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