I started some small businesses but need help figuring out taxes. Should I hire a CPA?
The only professional designations for people allowed to provide tax advice are Attorney, EA or CPA. Attorney and CPA must be licensed in the State they practice in, EA's are licensed by the Federal government. Tax preparers are not allowed to provide any tax advice, unless they hold any of these designations. They are only allowed to prepare your tax forms for you. So no, tax preparer is not a solution. Yes, you need to talk to a tax adviser (EA/CPA licensed in your State, you probably don't need a tax attorney). You should do that before you start earning money - so that you can plan properly and understand what expenses you can incur and how they're handled with regards to your future income tax payments. You might also want to consider a bookkeeping service (many EA/CPA offices offer the bookkeeping as well). But that you can also do yourself, not all that complicated if you don't have tons of transactions and accounts. Certainly sounds worthwhile to get a CPA to help you with setting up the books properly and learning to maintain them, even if you do it yourself thereafter. What's your own time worth?
I think you're making a mistake. If you still want to make this mistake (I'll explain later why I think its a mistake), the resources for you are: IRS.GOV - The IRS official web site, that has all the up-to-date forms and instructions for them, guiding publications and the relevant rules. You might get a bit overwhelmed through. Software programs - TurboTax (Home & Business for a sole propriator or single member LLC, Business for more complicated business), or H&R Block Business (only one version that should cover all) are for your guidance. They provide tips and interactive guidance in filling in all the raw data, and produce all the forms filled for you according to the raw data you entered. I personally prefer TurboTax, I think its interface is nicer and the workflow is more intuitive, but that's my personal preference. I wrote about it in my blog last year. Both also include plug-ins for the state taxes (If I remember correctly, for both the first state is included in the price, if you need more than 1 state - there's extra $30-$40 per state). Your state tax authority web site (Minnesota Department of Revenue in your case). Both Intuit and H&R Block have on-line forums where people answer each others questions while using the software to prepare the taxes, you might find useful information there. As always, Google is your friend. Now, why I think this is a mistake. Mistakes that you make - will be your responsibility. If you use the software - they'll cover the calculation mistakes. But if you write income in a wrong specification or take a wrong deduction that you shouldn't have taken - it will be on your head and you're the one to pay the fines and penalties for that. Missed deductions and credits - CPA's (should) know about all the latest deductions and credits that you or your business might be entitled to. They also (should) know which one got canceled and you shouldn't be continuing taking them if you had before. Expenses - there are plenty of rules of what can be written off as an expense and how. Some things should be written off this year, others over several years, for some depreciation formula should be used, etc etc. Tax programs might help you with that, but again - mistakes are your responsibility. Especially for the first time and for the newly formed business, I think you should use a (good!) CPA. The CPA should take responsibility over your filing. The CPA should provide guarantee that based on the documents you provided, he filled all the necessary forms correctly, and will absorb all the fees and penalties if there's an audit and mistakes were found not because you withheld information from your CPA, but because the CPA made a mistake. That costs money, and that's why the CPA's are more expensive than using a program or preparing yourself. But, the risk is much higher, especially for a new business. And after all - its a business expense. "This is several questions wrapped together: How can I diplomatically see the company's financial information? How strong a claim does a stockholder or warrantholder have to see the company's financials? What information do I need to know about the company financials before deciding to buy in? I'll start with the easier second question (which is quasi implicit).  Stockholders typically have inspection rights.  For example, Delaware General Corporate Law § 220 gives stockholders the right to inspect and copy company financial information, subject to certain restrictions. Check the laws and corporate code of your company's state of incorporation to find the specific inspection right.  If it is an LLC or partnership, then the operating agreement usually controls and there may be no inspection rights.  If you have no corporate stock, then of course you have no statutory inspection rights.  My (admittedly incomplete) understanding is that warrantholders generally have no inspection rights unless somehow contracted for.  So if you vest as a corporate stockholder, it'll be your right to see the financials—which may make even a small purchase valuable to you as a continuing employee with the right to see the financials.  Until then, this is probably a courtesy and not their obligation. The first question is not easy to answer, except to say that it's variable and highly personal for small companies.  Some people interpret it as prying or accusatory, the implication being that the founders are either hiding something or that you need to examine really closely the mouth of their beautiful gift horse.  Other people may be much cooler about the question, understanding that small companies are risky and you're being methodical.  And in some smaller companies, they may believe giving you the expenses could make office life awkward. If you approach it professionally, directly, and briefly (do not over-explain yourself) with the responsible accountant or HR person (if any), then I imagine it should not be a problem for them to give some information.  Conversely, you may feel comfortable enough to review a high-level summary sheet with a founder, or to find some other way of tactfully reviewing the right information. In any case, I would keep the request vague, simple, and direct, and see what information they show you.  If your request is too specific, then you risk pushing them to show information A, which they refuse to do, but a vague request would've prompted them to show you information B.  A too-specific request might get you information X when a vague request could have garnered XYZ.  Vague requests are also less aggressive and may raise fewer objections. The third question is difficult to say.  My personal understanding is some perspective of how venture capitalists look at the investment opportunity (you didn't say how new this startup is or what series/stage they are on, so I'll try to stay vague). The actual financials are less relevant for startups than they are for other investments because the situation will definitely change.  Most venture capital firms like to look at the burn rate or amount of cash spent, usually at a monthly rate.  A high burn rate relative to infusions of cash suggests the company is growing rapidly but may have a risk of toppling (i.e. failing before exit).  Burn rate can change drastically during the early life of the startup.  Of course burn rate needs the context of revenues and reserves (and latest valuation is helpful as a benchmark, but you may be able to calculate that from the restricted share offer made to you).  High burn rate might not be bad, if the company is booming along towards a successful exit. You might also want to look at some sort of business plan or info sheet, rather than financials alone.  You want to gauge the size of the market (most startups like to claim 9- or 10-figure markets, so even a few percentage points of market share will hit revenue into the 8-figures).  You'll also have to have a sense for the business plan and model and whether it's a good investment or a ridiculous rehash (""it's Twitter for dogs meets Match.com for Russian Orthodox singles!"").  In other words, appraise it like an investor or VC and figure out whether it's a prospect for decent return.  Typical things like competition, customer acquisition costs, manufacturing costs are relevant depending on the type of business activity. Of course, I wouldn't ignore psychology (note that economists and finance people don't generally condone the following sort of emotional thinking).  If you don't invest in the company and it goes big, you'll kick yourself.  If it goes really big, other people will either assume you are rich or feel sad for you if you say you didn't get rich.  If you invest but lose money, it may not be so painful as not investing and losing out the opportunity.  So if you consider the emotional aspect of personal finance, it may be wise to invest at least a little, and hedge against ""woulda-shoulda"" syndrome.  That's more like emotional advice than hard-nosed financial advice. So much of the answer really depends on your particular circumstances.  Obviously you have other considerations like whether you can afford the investment, which will be on you to decide.  And of course, the § 83(b) election is almost always recommended in these situations (which seems to be what you are saying) to convert ordinary income into capital gain.  You may also need cash to pay any up-front taxes on the § 83(b) equity, depending on your circumstances." Not sure how Technology Mgmt differs from IS but I would limit your options to be Finance, Accounting, TM/IS.   Technology is only going up and people are always going to have problems with it so no problems. Every larger company has an IT department that handles issues from looking for new technology or an IT Service Desk where you answer calls from someone having an issue with their computer. From what I hear from colleagues is experience is huge here. From an IT perspective I think this major would have the highest probability of landing a job.   Accounting and Finance is different. If you go down one of those paths, to be the most successful you'll have to take supplement courses to get either a CPA or CFA. Also working in the big accounting firms from what I've seen is super stressful based on when their clients close their books each quarter but is very rewarding. To move up in Accounting you'd want to get the CPA. If you don't have it, you'll plateau at some point and won't get any higher without it really.  I chose finance, but did not want to be a financial advisor. I did not like the idea of retaining clients by refers or cold calling. Essentially if you remember the scene on Wolf of Wall Street where Leo gets the little job and makes a huge sale off a cold call, that's what it is like when you first start out. You are pressured to sell insurance and stocks to your friends and family in hope that they refer you to their friends and family...it works for some people and it doesn't for others. Down this path you'd also possibly take the CFA tests and for sure series 6, 66, 7. Currently I'm not doing anything finance related but it is a great background for your personal finances and what not.  I would say you want to choose soon though so you can work on getting internships. Internships are huge as it will be a professional reference and if you do well in the position that company could hire you on once you graduate.  Hope this helped.  TLDR: Get an internship and experience the job. "I've been highly compensated for a while now, and I have never used a tax professional.  My past complications include the year that my company was bought by a VC firm and my stock options and stock held were bought out to the tune of 5x my salary.  And now I have two kids in college, with scholarships, and paying the remainder out of 529 accounts. Usually, I don't even use tax software.  My typical method is to use the online software -- like turbotax online -- and let it figure out where I am.  Then I use the ""Free File Fillable forms"" online to actually complete the process.  Search for ""Free File Fillable Forms"" -- it's not the same as using turbotax or TaxAct for free.   My suggestion to you:  download the PDF form of 1040EZ and 1040A from the IRS.  Print the EZ, and fill it out.  This will give you a better feel for what exactly is going on.  With your income, I don't think you can file the EZ, but it's a good way to get your feet wet. The way income taxes work here in the US: According to the IRS, the Personal Exemption this year is worth $4,050, and the Standard Deduction $6,300, assuming you're single.   Lets assume that your salary will be in fact 75,000, and you don't pay for any benefits, but you do make a 401k contribution of 15% of your salary.  Then your W-2 at the end of the year should tell you to put 63,750 in a particular box on your 1040 form.  (63,750 is 85% of 75,000).  Lets then assume 63,750 is your AGI after other additions and subtractions.  63,750 - 4,050 - 6,300 == 53,400. The federal Tax system is graduated, meaning there are different ranges (brackets) with different percentages.  The term tax people use for taxable income of 53,400 is ""marginal tax rate""...so the last dollar they tax at 25%.  Other dollars less.  According to the IRS, if you're single, then on 53,400, you pay ""$6,897.50 plus 25% of the amount over $50,400""  Or 6897.50 + 750, or 7647.50. Note this is only Federal Income Tax.  You will also be paying Social Security and Medicare payroll Tax.  And I'm guessing you'll also be paying colorado state income tax.  Each state has its own forms and methods for figuring out the taxes and stuff. By the way, when you start, you'll fill out a ""W-4"" form to ""help"" you figure out how much to withhold from every paycheck.  (I find the W-4 is not helpful at all).  Your company will withhold from your paycheck some mysterious amount, and the process of filling out your 1040A or 1040EZ or whatever will be, likely, to get the over-withheld amount back." "Before filing your first business tax return, you will need to choose a taxation method, either corporation or partnership. If you choose a partnership, then it's moot - your business income flows through to your personal taxes via form K-1. Also, regardless of your taxation method, you should consult a legal expert, since having your business pay off your personal debt would almost always be counted as income to you, and may cause you to lose the personal liability protections provided by the LLC (aka ""piercing the corporate veil""). Having a single-member LLC with no employees, you have to be very careful how you manage the finances of the business. Any commingling of personal and business could jeopardize your protections." "Hobby expenses are not tax deductible.  Business expenses are, but only if it's a bona fide business.  First they look at profitability: if you reported a net profit (i.e. paid taxes) in your first 3 years, they will believe you rant on Youtube for a living.   Remember, by the time they get around to auditing you, you'll likely be well into, or through, your third year.   There is an exception for farms.  Other than that, if you lose money year after year, you better be able to show that you look, walk and quack like a business; and one with a reasonable business reason for delayed profitability.  For instance Netflix's old business model of mailing DVDs had very high fixed infrastructure expense that took years to turn profitable, but was a very sensible model.  They're fine with that.  Pets.com swandived into oblivion but they earnestly tried. They're fine with that too.  You can't mix all your activities. If you're an electrician specializing in IoT and smart homes, can you deduct a trip to the CES trade show, you bet.  Blackhat conference, arguable.  SES?  No way.  Now if you had a second business of a product-reco site which profited by ads and affiliate links, then SES would be fine to deduct from that business.  But if this second business loses money every year, it's a hobby and not deductible at all.  That person would want separate accounting books for the electrician and webmaster businesses.  That's a basic ""duck test"" of a business vs. a hobby. You need to be able to show how each business gets income and pays expense separate from every other business and your personal life.  It's a best-practice to give each business a separate checking account and checkbook. You don't need to risk tax penalties on a business-larva that may never pupate.  You can amend your taxes up to 3 years after the proper filing date.  I save my expense reciepts for each tax year, and if a business becomes justifiable, I go back and amend past years' tax forms, taking those deductions.  IRS gives me a refund check, with interest!" Yep, you need to hire a lawyer and an accountant, honestly.    When I was starting my business, I hired one who was BOTH.  Not really for cost-savings, though it did save $$$, but it was super convenient and it's nice to have someone knowledgable in both.  It totally depends on your area, but don't overthink it or get intimidated.  It won't take as much $$$ as you think to hire someone, maybe $500-$1,000 or so upfront, then a small hourly fee probably every month if you need help with sales tax or accounts or whatever... you need to make sure the gov is getting theirs though from day 1 re: taxes, otherwise you're gonna regret it.  Much cheaper to get it all in place now. "I have done similar software work. You do not need an LLC to write off business expenses. The income and expenses go on Schedule C of your tax return. It is easy to write off even small expenses such as travel - if you keep records. The income should be reported to you on a 1099 form, filled out by your client, not yourself.  For a financial advisor you should find one you can visit with personally and who operates as a ""fee-only"" advisor. That means they will not try to sell you something that they get a commission on. You might pay a few $hundred per visit. There are taxes that you have to pay (around 15%) due to self-employment income. These taxes are due 4 times a year and paid with an ""estimated tax"" form. See the IRS web site, and in particular schedule SE. Get yourself educated about this fast and make the estimated tax payments on time so you won't run into penalties at the end of the year."