Nothing is worse than surprising your accountant with information that could’ve helped you avert a hefty tax fine or a last-minute crisis. We’ve put together a quick list of things you should tell your accountant ahead of time. Here are the top five:
- Your fundraising plans: if you’re planning on raising your Series A (or otherwise), please be sure to give your outsourced accountant as much heads up as possible. While everything we do here at Kruze is designed to be fundraising ready, there is still extra time that is required during the VC due diligence process, and we want to be ready for it. Without a “heads up”, your fundraising process might coincide with a vacation, a birth, or another client’s fundraising event!
- Your Hiring plans: Here at Kruze, we expect that all of our startup clients will grow. It’s just hard for us to tell when and by how much. We’ve seen startups remain stealth for 2 years with a 5 person team, then suddenly explode by bringing on 10 new hires a week! Needless to say, the volume and complexity goes up and we’d like to reserve our time for you when that time comes. Just give us a heads up and we’ll be there. Side note: we also have some good advice around the best payroll systems for high growth companies.
- Your Sales plans: Similar to your hiring plans, we’d like to know when you’re launching a new product and what type of volume to expect. Some companies have just a handful of large invoices per month, while others have thousands of small Stripe deposits. Each situation increases volume and complexity, and if you’ll need extra help we need to know sooner rather than later. Sales also create state nexus and sales tax obligations; if we can set up these accounts ahead of time we can avoid hefty sales tax penalties. Keeping us abreast of your bookings and revenue plans will save us all time and money.
- Your international expansion plans: if you’re planning on opening a foreign subsidiary, let your accountant know ASAP. We will need to file a Form 5471 and an FBAR (Foreign Bank Account Report) on your behalf along with the 1120. If the deadline is missed, it will absolutely result in a $25k+ penalty.
- Bringing on an International investor: if you’re planning on bringing on a Foreign Investor who will own more than 25% of the company, let your CPA know ASAP. We will need to file a Form 5472 on your behalf along with the 1120. If the deadline is missed, it will absolutely result in a $25k+ penalty.
Bonus 6th point: In 2021, we are seeing more and more companies are using cryptocurrencies and tokens for operational, transactional, and investment purposes. These these transactions creates a need for crypto accounting, and open up a whole new are of information sharing between founders and their bookkeepers. From the tax implications of crypto transactions to recording entries, crypto bookkeeping is an entirely new issue for many startup founders, even those who are not directly operating in the blockchain or crypto spaces.
While there’s a flurry of other information that you should provide to your accountant, these are the top 5 situations that carry a potential risk. Ideally, you should touch base with your accountant every month to clear up any questions and plan for the future. At Kruze, we offer a 30 minute complimentary call with your accountant every month to address any bookkeeping, finance, or tax issues.