Time to

[Andre Trudel]

Hi everyone.

 

I have finally realized that it’s time to “grow up” when it comes to this business. I have been spending adult money on gear so; it is definitely time to get a proper accounting team. Who do you Los Angeles operators recommend? If your accountant does not do tax preparations, I would also need a good recommendation on a tax person.

 

Obviously pm me if you do not feel comfortable publicly endorsing who you use.

 

As always, thank you for your time.

 

Andre Trudel

Edited March 15, 2014 by Andre Trudel

[Robert Starling SOC]

Hi Andre!

 

Finding and filling the CPA vendor role over the last 35+ years has been one of the most challenging things for me; probably the most difficult vendor to assess.

 

I've found that a lot of them tout themselves as business consultants, advisers, tax planners and such but by and large many of them are simply tax form preparers. Obviously we all need our tax forms prepared and accurately but much like a recipe for meatloaf, there are many recipes for getting to the final numbers of your tax liabilities or refund. The method they use was probably passed on to them by their early professors and mentors and while all the proper forms might be filled out and you end up with meatloaf (tax return), the taste and results can vary widely.

 

So how do you know?

 

Frankly it is entirely difficult if not impossible to know ahead of time who is the best match for you. Getting referrals and references as you're doing here is the first step but not the answer. Someone who may be perfect for me or someone else may not be perfect for you at all. Everyone's financial situation is different even though we all do roughly the same thing to earn a living.

 

Using the meatloaf analogy, some chefs (CPAs) lean towards hot and spicy, some toward sweet and some mix beef, veal and pork in their tax recipe. Few have more than one base recipe. Probably the best thing you can do is get 4-6 names of CPAs and sit down and interview them face to face.

 

First I would insist on someone who is working with other freelances who have at least a similar income and expense base. For instance that would be 1099 income, payroll W2 income and rental income. Don't skip over the types of expenses you have as well; rented equipment, leased equipment, purchased equipment, travel, food and lodging specific to what we do and what is customary in our industry. A good example is a previous CPA from many years ago only took 50% of my food and lodging which is sort of typical for a small business who entertains clients. What he and I failed to realize that in those numbers for my production company I was paying lunch / craft services and lodging for cast and crew which is a 100% deduction. I easily left $500k of deductions on the table over 6-8 years. Unfortunately by the time the next CPA found that mistake it was too late to file an amended return.

 

The other ingredient in this recipe is your tolerance and the CPA's tolerance or philosophy for pushing the edge or being conservative. You may hear a CPA say "you can take that deduction but it might flag you for an audit and I don't recommend it". That can be good or bad advice depending on your aversion to risk. My thought is if I can legitimately claim a deduction, prove the expense and prove that I would not have incurred that expense if it were not for my business, then I earned it and I want to take it. Why should IRS intimidation stop me! I'd also suggest if you are hearing this kind of warning from your CPA and it's a legit expense then you should be asking them if you are set up and operating as the correct type of entity such as sole proprietor or S-Corp.

 

I keep meticulous records and receipts, have never feared an audit and I want my legal deductions. Two years ago we had our first ever audit and no matter how prepared you are its a pain in the ass, expensive and aggravating as hell. In short, the IRS disallowed roughly $25,000 of expenses. In the long run I was able to satisfactorily substantiate all but $1200 worth without going to much greater time and expense. In the end I paid them $1200, the CPA $6500, temp office staff $1500 and spent about 100 hours of time between Jeanne and I working on it all. This is with organization to the level that I can put my hands on receipts from as far back as 1975 for large purchases. Based on spending $9200 total and 100 hours and a whole ass-load of stress for six months I'd probably write a check for $25,000 the next time, be pissed and move on... and those bastards know that. I'd need more espresso and a few more pages to detail the process but the feeling is just the same.

 

As for interviewing a CPA right now, you can forget that during tax season; they are buried until April 15th. If you need your 2013 return filed I suggest you file extensions which you can do on your own and start the interview process May 1. If you expect to owe taxes you are supposed to pay 90% of that with the extension but unless you are making a lot of money the penalty is likely less than you gain on a good return. YMMV.

 

After all this, my advice is to hire slow and fire fast. Take your time, interview at least four who work with other production professionals and understand our unique circumstances and see which chef matches your taste for finances.

 

Robert

[Daniel Stilling DFF]

Very good advice from Robert. What I did a few years back was actually send my numbers to 2 CPA's and see who worked best with me. It's a little costly as you have to pay them both, but you can see who is faster, better, more responsive, comes back with the best numbers, etc. Then decide...

[Osvaldo Silvera SOC]

Long ago, I asked the accountant at a Barry Diller owned TV station with 300 employees who he used as an accountant.. He told me, and I've been with him for the last 14 years. A few years ago a production company who sends me 1099's each year Filed exactly Double the amount they paid me with the IRS, So the IRS came knocking with penalties, fines, etc.. Just gave my accountant the letter, he figured it out in like 2 days, wrote the IRS a scathing letter basically spanking them, they wrote back 2 weeks later saying thank you for clearing that up and I was now fine and no money was owed. He tells me when I should deduct something and when I should not. The Tax preparation is definitely not cheap, and some years I have to file in several states, because some of the jobs I do take me out of state for several weeks at a time, It's always been worth it and I always have peace of mind with him.

PS, I'm not incorporated, Just me, paying self employment tax each year. I know if I incorporated I would keep more money, like 15% more, but that money would come at a cost of more time for me in preparing the taxes and filling out forms for the minutes in meetings,etc... and paying myself from my corp etc.. I rather not give that time way to paperwork. So I pay more in taxes, Keep a great Personal Liability policy and Equipment policy and live quite content.

[Andre Trudel]

Thanks guys.