Saving Money
The way to save money is to pay attention to everything, record everything, and generate accurate Profit & Loss Statements and Balance Sheets. Then you do two things with those financial statements. The first it to turn them over to your tax preparer who will be able to prepare your tax returns at the lowest possible cost due to your organization. (Make sure you and your preparer have the same accounting software available, so she can drill down to details such as what piece of equipment was purchased when, and not have to play phone tag during her busy season.) The second is to construct a year-to-year P&L so you can track trends in your sources of income and in your expenses to learn from them.
As someone else mentioned, hand over your history for a professional to deal with and concentrate on your future. If the partnership could make thousands of dollars in the winter, it should be a good trade off to pay a tax preparer a few hundred to prepare your tax returns and let you get back to your core business hours or days or weeks sooner.
Calling the IRS or looking in the yellow pages should be last resorts. Talk to other businesses your size, in your geographic location, in your industry, with anything else in common with you, to get referrals to their tax preparers. Network at your local chamber of commerce-type business-to-business events to meet other owners to bounce ideas off and to meet potential contractors that you feel comfortable with, such as tax preparers, lawyers, web site designers, whatever skill-sets aren't priorities in your core business, etc. (You probably want any skill necessary to your core business to be contributed by a partner or employee -- for your control. But, secondary skills, such as tax preparation, could be contracted for on an hourly or project or as-needed basis to save money.) Don't take your own time away from making money in your business to learn the finer details of partnership tax preparation. That's not an efficient use of your time, unless you're already a tax preparer wanting to add partnerships to her practice. (By the way, I agree with several posters that partnerships can be the most complex of all business entities due to their hybrid nature as both a separate entity and a pass-through and also due to the ease with which partners can comingle personal and business activities and funds, such as using a personal card to order business supplies online when the partnership doesn't have a credit card. Office-in-home and business use of a personal vehicle are two examples of different possibilities for different business entities.)
After tax season, contract with a preparer to review your returns at an hourly rate. Then, if you still like her, ask her what her charge would've been to prepare those same returns from scratch if you had provided her with accurate P&L and Balance Sheets. How do you know it's actually cheaper to do it yourself? How much income have you foregone while working with your returns? Have you thought about an outside preparer for the partnership return and then preparing your own personal returns after you have the professionally-prepared K-1s from the business return? Doing your own day-to-day bookkeeping can be cost effective and smart; you have a feel for your cash flow, who's paying late, etc. But do-it-yourself tax preparation has no business reason since it's interfacing with the IRS and your state and not with your clients and not giving you any new information you don't already have in your bookkeeping system.
Good luck
The way to save money is to pay attention to everything, record everything, and generate accurate Profit & Loss Statements and Balance Sheets. Then you do two things with those financial statements. The first it to turn them over to your tax preparer who will be able to prepare your tax returns at the lowest possible cost due to your organization. (Make sure you and your preparer have the same accounting software available, so she can drill down to details such as what piece of equipment was purchased when, and not have to play phone tag during her busy season.) The second is to construct a year-to-year P&L so you can track trends in your sources of income and in your expenses to learn from them.
As someone else mentioned, hand over your history for a professional to deal with and concentrate on your future. If the partnership could make thousands of dollars in the winter, it should be a good trade off to pay a tax preparer a few hundred to prepare your tax returns and let you get back to your core business hours or days or weeks sooner.
Calling the IRS or looking in the yellow pages should be last resorts. Talk to other businesses your size, in your geographic location, in your industry, with anything else in common with you, to get referrals to their tax preparers. Network at your local chamber of commerce-type business-to-business events to meet other owners to bounce ideas off and to meet potential contractors that you feel comfortable with, such as tax preparers, lawyers, web site designers, whatever skill-sets aren't priorities in your core business, etc. (You probably want any skill necessary to your core business to be contributed by a partner or employee -- for your control. But, secondary skills, such as tax preparation, could be contracted for on an hourly or project or as-needed basis to save money.) Don't take your own time away from making money in your business to learn the finer details of partnership tax preparation. That's not an efficient use of your time, unless you're already a tax preparer wanting to add partnerships to her practice. (By the way, I agree with several posters that partnerships can be the most complex of all business entities due to their hybrid nature as both a separate entity and a pass-through and also due to the ease with which partners can comingle personal and business activities and funds, such as using a personal card to order business supplies online when the partnership doesn't have a credit card. Office-in-home and business use of a personal vehicle are two examples of different possibilities for different business entities.)
After tax season, contract with a preparer to review your returns at an hourly rate. Then, if you still like her, ask her what her charge would've been to prepare those same returns from scratch if you had provided her with accurate P&L and Balance Sheets. How do you know it's actually cheaper to do it yourself? How much income have you foregone while working with your returns? Have you thought about an outside preparer for the partnership return and then preparing your own personal returns after you have the professionally-prepared K-1s from the business return? Doing your own day-to-day bookkeeping can be cost effective and smart; you have a feel for your cash flow, who's paying late, etc. But do-it-yourself tax preparation has no business reason since it's interfacing with the IRS and your state and not with your clients and not giving you any new information you don't already have in your bookkeeping system.
Good luck
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