How much should I allocate for end-of-the year accounting expenses?
 

I started a business in early January of this year. It's an LLC with a total of 3 investors (45%, 45% and 10%), two of which are actually actively involved in the business. Besides the two out of the three founders, we have no one else working for us. We expect to take a small loss or to make a small profit by the end of the year. We have a detailed Excel spreadsheet with our revenue/expenses.

Approximately how much are we going to spend on accounting fees? How much money should be allocate for accounting fees (not the actually taxes, but how much we will pay the accountant for his time)?

Much obliged gentlemen (and ladies).

Re: How much should I allocate for end-of-the year accounting expenses?
 

[ QUOTE ]
I started a business in early January of this year. It's an LLC with a total of 3 investors (45%, 45% and 10%), two of which are actually actively involved in the business. Besides the two out of the three founders, we have no one else working for us. We expect to take a small loss or to make a small profit by the end of the year. We have a detailed Excel spreadsheet with our revenue/expenses.

Approximately how much are we going to spend on accounting fees? How much money should be allocate for accounting fees (not the actually taxes, but how much we will pay the accountant for his time)?

Much obliged gentlemen (and ladies).

[/ QUOTE ]

This question is very difficult to answer given the information that you've given. I do my own taxes, and once in a while I hire a CPA or a tax lawyer for a specific action (i.e., a delayed exhange or some such). When I hire a tax advisor, I usually pay him/her between $100-$250 per hour. I also hire the best, most qualified advisors who have a proven track record and meet my very very stringent criteria. In the long run, I've found cheaper advisors to be highly -EV.

Anyway, it depends a lot on how complex your tax situation is. If you've got a complex situation, obv you've got a bigger expense.

Re: How much should I allocate for end-of-the year accounting expenses
 

Thanks for the response. Our tax situation shouldn't be all that complicated (we just started up, have no employees besides the founders, maybe a small profit). Should we budget for the accounting expenses to amount to a couple of thousand dollars? Basically, should we keep like $2k extra in in the bank account when tax time rolls around?

Re: How much should I allocate for end-of-the year accounting expenses
 

eh, sure, $2-$3k should probably cover it pretty easily, and you'll probably have some left over. Be careful to get an estimate from the tax preparer and have him explain how much he is charging and how he came up with the number. You don't get rich by giving tax advisors blank checks, so set a precendent up front where he expects to account for all the money he's charging you. Also, make sure that he knows to call and get permission before going over $X in fees, otherwise you might end up holding a much larger bill than anticipated.