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When you’re running a small business, the burden of building your client or customer base and generating profits is your primary concern. In fact, getting your business off the ground can be so time-consuming that you may start neglecting other aspects of your company that are nearly as important.

That’s especially true when it comes to managing the finances of your business, and ensuring that your ‘books’ are balanced, and that you are always aware of your cash flow, expenditures, and employee payroll.

So whether you have chosen to hire a bookkeeper, or you’ve chosen to take a step up in expertise and brought on a certified public accountant (CPA), you must maximize their service by ensuring that you are asking the right questions about your business.

With that in mind, here are two essential questions to ask your bookkeeper, and two essential questions to ask your CPA, which can help you manage your business finances in a more efficient manner.

Two Questions To Ask Your Bookkeeper

Bookkeepers are adept at handling day-to-day activities such as balancing your income and revenues, reconciling your bank statements, generating invoices and generating daily, weekly and monthly cash reports.

As a business owner, you must look beyond the basic responsibilities of your bookkeeper, and delve deeper into their skill-set, to improve the future profitability and increase your business’s efficiency. So the first question to ask is:

1. In What Areas of the Business Am I Spending Too Much Money?

Because bookkeepers are responsible for handling the day-to-day financial activities of a business, they should be able to spot trends or patterns in spending that could pose a problem for future profitability.

In fact, it’s a sign of trouble if your bookkeeper answers this question with a blank stare, because it means that not enough attention is being paid to the bottom line.

Bookkeepers should always know more about which areas of a business are most costly, and which are the most affordable, and if your bookkeeper can’t identify and express these figures to you in easy-to-understand language, it may be time to consider a change.

Knowing where you can save money in your spending is one of the most important ways to boost your company’s profit margin.

2. What Suggestions Can You Give Me To Customize My Financial Reports?

One of a bookkeeper’s main duties is to generate a financial report for your business that typically includes information regarding cash on hand, accounts receivable, inventory, notes receivable, as well as the value of fixed assets, and the amount of current liabilities

But your bookkeeper should also be able to customize your financial reports beyond the standard boilerplate.  That’s important, because a customized financial report is conformed to match your business climate, and special circumstances that apply solely to the company you run.

For example, a local pizzeria that exclusively uses organic meat as a topping, will require a customized report that includes the delivery schedule and contingencies related to the availability of organically-fed livestock.

Two Questions To Ask Your Accountant

Because accountants have a larger field of expertise than bookkeepers, there’s a wider range of questions that you can ask them to help increase your overall revenue.

Like bookkeepers, accountants can balance your daily, weekly and monthly accounts receivable and accounts payable, but they can also provide you with invaluable tax advice and identify areas to reduce your company’s tax burden.

So with all those services in mind, the following two questions are essential to ask your CPA:

1. How Can I Maximize My Tax Deductions?

For most small business owners, tax season is a killer, a time when the looming ‘amount due’ to Uncle Sam crushes their hopes and dreams. That’s why it’s an absolute must that months before taxes are due, you ask your CPA the specific ways to maximize your tax deductions.

Most small businesses are eligible for deductions that are designed to specifically reduce their taxable income.

But a CPA is trained to dig deeper and find deductions that are not so readily evident. For example, many small business owners may not be aware that they can deduct a portion of their startup costs, and amortize any amount that exceeds the IRS’s maximum.

This is something that a CPA would know, but by asking this question, you will ensure that your business receives all the deductions for what it is eligible.

2. What Type of Business Structure Is Best For My Company?

Establishing the right business structure can make or break your company? Why? Because there is a world of difference – especially in tax liability and legal liability – between opening an limited liability corporation (LLC), a C-corp., an S-corp, partnership, or a sole proprietorship.

For example, your CPA will know that a sole proprietorship is best if you intend to run your business by yourself for the foreseeable future. With a sole proprietorship, your business will only be taxed once, unlike with some of the other structures, but you are responsible for any liabilities your company incurs, which means that a vendor or business associate can sue you personally for business debts.

Your CPA may recommend a partnership if you and another person or several other people will jointly own your business. But partnerships have the same disadvantage as a sole proprietorship when it comes to your personal liability for business debt.

For maximum protection against personal liability for business debts, your CPA may recommend establishing a corporation, which also allows you to offer stocks, and avoid paying taxes on some portion of your business profits. Owning a corporation also allows you to pay yourself as an employee of your own company.

Bonus: Essential Question to Ask Your Advanced Bookkeeper (or Accountant)

Can You Provide Me With a Break-Even Analysis?

This is a question some small business owners overlook when talking to their bookkeeper, but it is vital to the future success of your business. You may feel that this question is better suited for your CPA, but an experienced bookkeeper is usually adept at providing a break-even analysis, and generating projections based on when your business will become profitable.

Your break-even point is the point at which your company is not making money, but not losing money either.

Why is this important? Because knowing your break-even point gives you a goal to shoot for, because everything above that point is profit for your business, which is the whole idea, right?

But you notice that this question isn’t: “What is my break-even point?” That’s because knowing your break-even point is just the beginning.

A bookkeeper with a more advanced financial background should be able to provide you with a break-even point analysis that tells you how your business can start generating profits.

This may include increasing spending in one area of your business, investing in new equipment and new technology, trimming your payroll, and collecting monies due from vendors in a more efficient way.

These questions can help boost the profitability of your business, and lead to a more efficient business process. They can also help you identify weaknesses in your business plan, and identify areas of overspending – or in some cases, even underspending.

Obviously, these are not the only questions you can ask a bookkeeper or a CPA, but they are the most important in terms of your bottom line, and a great place to start. The more you work with your bookkeeper and CPA, you’ll discover the best way to leverage their areas of expertise and support the growth of your business.