Small Business (Sales Rep) Accounting Advice

[86 911]

I've started my single-member LLC as an independent sales representative for plastics extrusion and coating line equipment. Finally threw in the towel on corporate sales life (yay!). Having never run a business, the one area of expertise that I lack is small business finance. I've already set up a business bank account and I plan to purchase accounting software (Quickbooks or similar) to help me organize my transactions. I've also watched many YouTube videos.

Revenue and expenses are simple. Revenue = comission payments from my principals. Expenses = travel expenses and mileage. I will not hold inventory nor stock any machinery nor bill end users for service work. I have revenue forecasts based on what my principals shared for territory sales. I will share this privately.

I contacted a highly reviewed accounting firm in my area and waited a month for the appointment. The day before, I was told that I would have to pay an astronimical consultation fee for my 1-hour visit. I'm sure they are fantastic, but I'm just looking for some basic advice to help me get started correctly from the beginning.

Anyone out here willing to help with some basic pointers & tips? I realize this is an automotive forum, but figure there are some out there with a bit more experience. Feel free to PM me and I can share more details.

[911 Rod]

The key to success is to be as lean as possible in the beginning.
You need a bookkeeper, not an accountant. Accountant is needed for filing year end.
Try to find accounting software than you can buy, not the on-line subscription type. (not sure if that is even possible anymore)
Everything you do before having the bookkeeper do everything will save you money.

[LWJ]

No specific info but I am living vicariously through you on this! Congrats!!!!! I never had the courage to go out on my own and I have some regrets.

[Rick Lee]

Until you're cash flowing to the point of not knowing how to spend it all, I'd live by QuickBooks for day to day stuff and then export the reports to your CPA at the end of the first year. He'll then tell you what you need to be paying for quarterly estimates. Eventually you can pay him to set up a payroll for you, to save money on FICO taxes, pay yourself a salary and then take distributions. But that's after you are cash flowing. I would not be paying consulting fees to anyone until the revenue is flooding in.

[3rd_gear_Ted]

Congrats on realizing rule #1; you won't ever get rich working for someone else.
Don't incorporate in California, I incorporated in AZ for $50. CA is $800 and all the other headaches.

You need to create your own Corporate Policies & Procedures for when you sit down to talk finance.
Those folks need that info and it shows your act is together.

[86 911]

Thanks for the tips. I incorporated in CA. It will be more expensive but it's less complex since I reside and will do most of my business in the state. I may revisit that.

@LWJ, thanks!! It's an exciting journey. Lots at stake with two young ones but at least I have one solid principal that will pay my bills based on their historicals. Adding a couple more partnerships as we speak.

[stealthn]

Been running my own company for almost 30 years, get Quickbooks online and get an accountant to do your year ends. Easy stuff

[jhynesrockmtn]

My buddy runs a small construction company. He has a bookkeeper come in weekly or twice a month to run his payroll and process payments and billing. At the end of the year, he has a CPA do his taxes. I'd start with a CPA to make sure you are set up correctly for owner distributions, quarterly filings and estimated payments, setting up equipment depreciation, walking you though how to track expenses, any state revenue department reporting you need, etc. Then a bookkeeper can take over and train you on quickbooks and what you need to do monthly. If you stay small, you can probably take it over yourself. Many small CPA offices have a bookkeeping service as well. You just need to find the right one that won't break the bank. They are out there. I'm a formerly licensed CPA but hire someone to do my taxes because I haven't kept up on things over the years.

[berettafan]

SMLLC pays SE tax so no payroll. S corp would mitigate that but brings requirement to take 'reasonable salary'. Depending on your numbers it may well not be worth the cost to go S. Other factors are involved in the decision as well.

Intuit is the devils spawn but also the best option you've got. Nothing complex here. Keep a mileage log and deposit all revenue into a bsns account under the EIN. Pay all relevant bsns expenses out of same account. makes the bookkeeping easy.

if you anticipate significant excess cash flow (say $20k or better) get in touch with a competent financial advisor to look into 401k options.

your situation is pretty basic and any competent cpa can handle it for you. you don't need the fanciest office, this isn't rocket science at all.

[GH85Carrera]

As a LLC, you just take a draw on the company checking account. The LLC pays zero taxes, and it all fall to you the owner to pay the taxes.

Record every single expense as they are subtracted from all payments.

Find a small one or two man CPA to help give advice, and file the tax forms at the end of the year, and file the W-9s for every company you buy from.

I use the desktop version of QuickBooks.

[NYNick]

It's not rocket science so don't over complicate it. You're basically talking about a checkbook...money in (revenue) money out (expenses).

Quickbooks can be as simple or as complicated as you want it to be. Start simple, enter your figures and run reports now and then to see how you're doing. Don't bother with an accounting firm for now. You simply need someone to do your taxes year end. QB will generate reports for them.

I put every Monday morning aside to do all my paperwork, pay bills and go over statements. This became an invaluable tool as I opened all my mail, paid invoices and entered my weekly numbers into QB. As of Monday afternoon, EVERY WEEK, I knew exactly where my finances stood, good or bad.

Don't EVER let someone else run your numbers day in and day out, unless your business gets so big you need an accounting department. It's your business, your money and your responsibility to know the finances.

Do not shy away from this responsibility.

[911 Rod]

I cannot emphasize enough how important it is to keep on top of your books.
People sometimes focus on production and give their bookkeeper a shoe box of assorted papers once a year.

[GH85Carrera]

Originally Posted by 911 Rod

I cannot emphasize enough how important it is to keep on top of your books.
People sometimes focus on production and give their bookkeeper a shoe box of assorted papers once a year.

And accurate bookkeeping! Enter the correct date of all expenses and income. Every singe expense and bit of income.

When I set up my business, I sought out the advise of a CPA. He helped set up my chart of accounts, and classes and categories for billing. If you have expenses for one client, deduct that cost from that account, and you can see the real profit of each customer.

I just bring my CPA a copy of my QuickBooks file, and he can adjust things and run reports, then do my taxes. As I mentioned before, as a LLC the LLC itself does pay any taxes. All taxes are paid by the owner(s) of the LLC.

On the first year of business, we were audited by the IRS. II had to buy a new printer-scanner-fax-copier to print paper copiers of every single receipt. That took a ream of paper and sever weeks of time. In the end, they said we underpaid by 30 bucks. She did not even reopen the case for that. Only because I had the accounting done right did we get out of the audit unscathed.

[BillYates]

That’s a big step, and it sounds like you’re already on the right track with a business bank account and plans for accounting software. QuickBooks is user-friendly, so it’s a solid choice for tracking your commissions and expenses. For keeping things organized, consider setting up separate categories for your travel expenses and mileage in the software. It makes it easier at tax time. And don't hesitate to save receipts or keep a digital record for anything related to your business.

[86 911]

Thanks for the replies! I ended up getting Quickbooks and I'm tracking my expenses and mileage that way. It's all subscription based now, unfortunately, but at least the interface is easy to use.

I'll keep those pointers in mind. Been traveling about a month straight visiting customers and getting training from my principals. Have to put my 911 engine rebuild on hold but I think this will be worth it in the end.

[A930Rocket]

Originally Posted by ShyAngel23

I set mine up to track commissions as a separate line item, mapping it to a cost-of-goods-sold account so it shows up clearly on P&L and doesn't get buried in overhead.

What’s the going rate for BOTS now?

[Seahawk]

Originally Posted by A930Rocket

What’s the going rate for BOTS now?

Just PM me or OT+PARF and we'll take care of it...

BTW, I am interested in any updates...

I have some experience in this area.