Moonlighting Entrepreneur: Using a CPA

by Trish


Image by Cameosteph

A few weeks ago I wrote about getting legal help for your moonlighting business, especially as you created your new legal entity. Today, no matter what your legal entity (sole prop, LLC, S, C, partnership), I recommend knowing (and using) a good CPA. Sure, it costs extra each year to have a CPA looking over your accounts, but you know what? It pays off. Trust me.

In 2004, we purchased a business vehicle under the SUV Loophole put in place after the 9/11 attack, which was a legal loophole the IRS allowed for small businesses to write off the cost of that vehicle without any limits on price. It sounds unfair now, but trust me, doing business the fall of 2001 was no picnic (and I was full-time freelance). As a result of that terrible fall, I had to get a part-time job to support myself. By the time I got to 2004, my business was picking up and I needed a vehicle. I bought the vehicle at the advice of my CPA.

He did our 2004 taxes, last year of sole proprietorship. In May 2005, we were notified of an audit on our last year of sole prop because of that vehicle.

Long story short, my CPA handled the entire thing. We fought it. I spent half of what the tax bill was from the audit to pay my CPA to fight it. Best money I ever spent. My CPA got the IRS to rescind the audit bill and to apologize (and they begged me not to sue them for over-reach; I did not, I’m not vindictive by nature; I just wanted what was rightfully and lawfully mine.)

I never bemoaned the cost of our CPA even before the audit, and now I never ever will bemoan the cost of my CPA. He is worth his weight in gold. If I ever lose him, I will cry, a lot. To me, he’s superman.

It’s another 1k to 2k a year to use a CPA for your business. Put the money aside for next April and trust me, you’ll be glad you did. Just like your customers use you as an expert in your field of experience, think of a CPA as utilizing his expertise, the most important expertise. Mismanagement of funds (however innocently it occurred) can take a moonlighting business down faster than anything. Trust me, I was this close.

And boy did my CPA enjoy taking the IRS down a notch. I think it was the highlight of his career! Best money I ever spent! I think he bought a car from it. Fine by me! Glad to oblige. Cheers.

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