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Why Every Entertainer Needs a Bookkeeper and Accountant

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Being an entertainer is exhilarating—but it’s also financially complex, which is why most successful entertainers work with a professional bookkeeper. Whether you’re an actor chasing your next role, a musician touring venues, or an influencer building your brand, you’re managing more than just your craft—you need a skilled bookkeeper to handle the financial complexity that comes with creative careers. You’re dealing with irregular paychecks, complex tax rules, and expenses that don’t fit into typical business categories.

At Archer Lewis, we understand how overwhelming that can be. That’s why we offer bookkeeping and accounting services designed specifically for entertainers and creative professionals. We help you stay compliant, maximize deductions, and build financial security—so you can focus on what really matters: your craft.

Without the right financial structure, it’s easy to miss opportunities or make costly mistakes that affect your cash flow, tax liability, or even your long-term financial security.

This guide breaks down what entertainers need to know about working with bookkeepers and accountants to build smart, transparent systems that keep your finances running smoothly and set your career up for long-term success.

What bookkeepers and accountants do for entertainers

A bookkeeper and accountant work as a team to handle the financial complexity that comes with entertainment careers. These professionals understand that entertainers operate differently from traditional businesses—your income fluctuates, your expenses are unique, and your tax situation is anything but straightforward.

Because entertainers handle both creative work and business operations, they need financial support that addresses:

  • Irregular income streams and cash flow management
  • Entertainment-specific tax deductions and compliance
  • Multi-state or international tax obligations
  • Revenue tracking across various platforms and projects
  • Expense categorization for industry-specific costs

Smart financial management ensures you stay compliant with tax requirements and provides instant access to critical financial data that fuels better career decisions.

If you’re just starting out in the entertainment industry, finding the right financial partner may be the first step to setting up a solid foundation.

Key financial components in the entertainment industry

The entertainment industry generates massive revenue: the global entertainment market is worth over $2.3 trillion annually and supports millions of creative professionals worldwide.

Building an entertainment career can cost anywhere from a few thousand dollars to hundreds of thousands, depending on your field. An airtight financial framework is vital, as entertainment businesses have unique income patterns and financial transactions.

Understanding how each affects your financial records and cash flow is critical:

Irregular income streams: Revenue from gigs, royalties, sponsorships, and projects that arrive sporadically. These require careful cash flow planning and tax preparation strategies.

Industry-specific deductions: Equipment, travel, wardrobe, and training costs that may be tax-deductible when properly documented and categorized.

Multi-jurisdiction obligations: Tax compliance across different states or countries where you perform or earn income.

Estimated tax payments: Quarterly payments required for self-employed entertainers who don’t have taxes withheld from paychecks.

Without a firm grasp on how these affect your financial statements and tax obligations, it’s easy to make errors that could snowball over time.

Why financial management matters for entertainers

Financial management for entertainers isn’t just about knowing your profit and loss. It’s about maximizing deductions, ensuring compliance, and building wealth despite income volatility.

Key financial practices to build into your entertainment career include:

  • Cash flow statements that help you manage irregular income cycles
  • Expense tracking systems that capture every deductible cost
  • Tax planning strategies that minimize your liability legally
  • Long-term savings plans that account for industry ups and downs

This isn’t busywork. These practices support smarter financial decisions and help you build sustainable wealth throughout your career.

Common entertainment finance mistakes

Getting entertainment finances wrong isn’t just inconvenient—it’s expensive.

Here are the top mistakes we see entertainers make:

Mixing personal and business finances: This clouds financial records and complicates tax implications, especially when claiming business deductions.

Missing tax deadlines: Whether for quarterly estimated payments or annual filings, late submissions can result in penalties and interest charges.

Using generic financial tools: Software or services not built for entertainers often miss industry-specific deductions or mishandle irregular income patterns.

Poor expense documentation: Without proper receipts and categorization, you lose valuable deductions and risk audit complications.

Working with financial professionals who understand the nuances of entertainment careers can help you avoid these costly pitfalls.

How strong financial management supports career growth

A well-structured financial system does more than meet minimum requirements. It creates the foundation for long-term career success.

Here’s what you need:

Organized expense tracking to capture every deductible cost from travel to equipment to professional development.

Cash flow management that helps you budget during lean periods and save during profitable projects.

Tax optimization strategies that maximize deductions while ensuring full compliance with complex entertainment tax laws.

Long-term wealth building through retirement planning and investment strategies designed for irregular income earners.

All of this creates a streamlined process that improves financial stability, supports career planning, and keeps you focused on what matters: creating and performing.

If you’re still looking for the right financial partner, it’s important to choose professionals who understand entertainers’ unique financial challenges.

When to bring in entertainment finance experts

You may be ready for specialized financial support if:

  • You’re earning income from multiple sources or platforms
  • You’re struggling to manage cash flow between projects
  • You want better insight into tax deductions and planning opportunities
  • You spend more time on financial paperwork than on your craft

Partnering with bookkeepers and accountants who specialize in entertainment finances helps you reduce administrative work, ensure compliance, and improve financial clarity.

Why entertainers choose Archer Lewis

At Archer Lewis, we offer tailored financial solutions for entertainers at every stage of their careers. Our team provides clear, proactive support, whether you’re just starting out or managing multiple revenue streams across different markets.

We combine the best of both worlds: expert human guidance and cutting-edge financial technology.

Our services include:

  • Specialized bookkeeping for entertainment businesses
  • Tax planning and preparation for complex entertainment income
  • Cash flow management for irregular earnings
  • Financial reporting that tracks multiple revenue streams
  • Strategic planning for long-term wealth building

With Archer Lewis, you gain a dedicated team that understands your industry and works with you to maximize deductions, avoid costly errors, and build financial security.

Let’s simplify your entertainment finances

Whether you’re launching your career or managing multiple projects, the financial side of entertainment shouldn’t hold you back. If you’re tired of wrestling with tax complexities, juggling irregular income, or worrying about missed deductions, you’re not alone—and you don’t have to handle it alone.

At Archer Lewis, we offer specialized support that helps you stay compliant, optimize cash flow, and get more value out of your financial data. No confusing generic advice. No unreturned calls. Just clear guidance from people who understand how entertainment careers work.

Start a conversation with our team today. We’ll help you build a financial system that supports your creative goals—and gives you time back to focus on what you do best.

The Ultimate Guide To Franchise Accounting

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Running a franchise is exciting—but it’s also demanding. You’re expected to manage day-to-day operations and meet the standards of a national brand. On top of that, you’re dealing with complex financial rules that don’t apply to most small businesses.

That’s why having a clear system for franchise accounting is so important. You’re not just tracking income and expenses—you’re managing royalty payments, marketing fees, and compliance across multiple locations. Without the right structure, it’s easy to fall behind or make costly mistakes that affect your cash flow, reporting, or even your relationship with the franchisor.

This guide breaks down what franchise owners need to know to build smart, transparent systems that keep things running smoothly and set your business up for long-term success.

What is franchise accounting?

Franchise accounting refers to the financial tracking and reporting required for franchise businesses. These businesses operate under a franchise agreement, where a franchisee pays the franchisor an initial fee and ongoing fees in exchange for the right to use the franchisor’s brand, systems, and support.

Because franchisees handle both standard business operations and brand-specific financial responsibilities, they need an accounting system that addresses:

  • Royalty fees and ongoing royalty fee calculations.
  • Initial franchise fees and how to properly record them as an intangible asset.
  • Marketing expenses and advertising contributions.
  • Franchise-specific revenue recognition.
  • Bookkeeping across multiple locations.

Accurate franchise accounting ensures compliance with regulatory requirements and provides instant access to critical financial data that fuels decision-making.

If you’re in the early stages, hiring an accountant for small businesses may be the first step to setting up a solid foundation.

Key financial components in a franchise model

They’re often huge financial operations: franchises collectively generate $890 billion in revenue annually and employ 2.3 times as many people as non-franchise businesses.

Opening a franchise can cost anywhere from about $10,000 to several millions of dollars. An airtight franchise accounting framework is vital, as franchise businesses have unique fees and financial transactions.

Understanding how each affects your financial records and cash flow is critical:

  • Initial franchise fees: A one-time payment made to start the business. Accounting standards often require amortizing initial fees over the life of the agreement.
  • Royalty fees: A percentage of gross revenue paid regularly. These ongoing royalties are tied directly to the franchisee’s success.
  • Continuing franchise fees: Includes marketing fees, technology fees, and other support services the franchisee pays over time.
  • Ongoing support: This is often included in the franchise fee structure and covers brand resources, staff training, and operational systems.

Without a firm grasp on how these affect your balance sheet and financial statements, it is easy to make errors that could snowball over time.

Why financial reporting matters

Financial reporting for franchisees isn’t just about knowing your profit and loss. It’s about meeting franchisor expectations, ensuring compliance, and setting the foundation for a successful business.

Key reports to build into your franchise accounting processes include:

  • P&L statements that break down revenue streams and expenses.
  • Cash flow statements to manage day-to-day liquidity.
  • Royalty fee reports to confirm accuracy and maintain transparency with the franchisor.
  • Marketing expense tracking to ensure contributions are properly allocated.

This isn’t busywork. These documents support smarter cash flow management and help you meet both internal goals and external requirements.

Common franchise accounting mistakes

Getting franchise accounting wrong isn’t just inconvenient—it’s expensive.

Here are the top mistakes we see franchise owners make:

  • Mixing personal and business finances: This clouds financial records and complicates tax implications.
  • Missing reporting deadlines: Whether for tax or franchise brand compliance, late filings can result in penalties and damage trust.
  • Using generic software or services: Tools not built for franchises often mishandle certain fees or revenue recognition protocols.
  • Inaccurate royalty calculations: This can trigger financial audits or put your franchise agreement at risk.

Working with professional accountants who understand the nuances of franchise operations can help you stay on the right foot.

How a strong accounting system supports growth

A well-structured accounting system does more than meet minimum requirements. It lays the foundation for long-term growth.

Here’s what you need:

  • Custom chart of accounts to segment financial data by location, department, or type of expense.
  • POS integrations for real-time tracking of financial transactions.
  • Centralized payroll that supports multiple locations and meets state-level tax obligations.
  • Reliable reporting that satisfies both internal leadership and franchisor audits.

All of this creates a streamlined process that improves cash flow, supports business planning, and keeps you focused on what matters: running a successful business.

If you’re still shopping for small business accounting companies, it’s important to choose a team that understands franchises’ unique financial structure.

When to bring in a franchise accounting expert

You may be ready for a specialized partner if:

  • You’re preparing to open another franchise location.
  • You’re struggling to meet reporting requirements.
  • You want better insight into cash flow and profitability.
  • You spend more time in spreadsheets than with your customers.

Partnering with a professional accountant specializing in franchise accounting helps you reduce manual work, ensure compliance, and improve financial visibility.

Why franchisees choose Archer Lewis

At Archer Lewis, we offer tailored financial solutions for franchisees alike. Our team provides clear, proactive support, whether you’re just getting started or managing multiple locations.

We combine the best of both worlds: expert human support and the latest accounting technology.

Our services include:

  • Bookkeeping services.
  • Financial reporting.
  • Tax strategy and preparation.
  • Cash flow planning.
  • Payroll and compliance.

With Archer Lewis, you gain a dedicated team that understands your business model and works with you to maintain transparency, avoid costly errors, and grow confidently.

Let’s simplify your franchise accounting

Whether you’re just getting started or managing several locations, the financial side of franchising shouldn’t hold you back. If you’re tired of wrestling with reporting requirements, juggling royalty payments, or worrying about costly mistakes, you’re not alone—and you don’t have to do it alone.

At Archer Lewis, we offer tailored support that helps you stay compliant, improve cash flow, and get more clarity out of your numbers. No confusing software. No unreturned emails. Just clear answers from people who understand how franchise businesses work.

Start a conversation with our team today. We’ll help you build a system that supports your growth—and gives you time back to focus on running your business.

The Ultimate Guide To Restaurant Bookkeeping

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Running a restaurant isn’t just hard work—it’s high-stakes. You’re managing staff, suppliers, and service while juggling slim profit margins and constant pressure to keep costs in check. And with so many moving parts, even minor slip-ups in restaurant bookkeeping can snowball into real problems.

From food and labor costs to vendor payments and payroll, your business runs on nonstop financial transactions. Without the right systems in place, it’s easy to lose track of the numbers that matter most—and that’s where your restaurant’s financial health starts to suffer.

At Archer Lewis, we understand how overwhelming that can be. That’s why we offer bookkeeping services designed specifically for restaurant owners. We help you stay organized, meet deadlines, and make smarter decisions—so you can focus on what really matters: running your restaurant.

What is restaurant bookkeeping (and why it matters)

Ask any restaurant owner what keeps them up at night, and finances are usually near the top of the list. Studies show that the leading challenges for restaurant owners are financial—such as labor costs and inflation. Further data reveals that nearly 30% of restaurants fail within the first year, often due to poor cash flow, underestimating expenses, or lacking clear financial oversight. These realities make accurate, consistent bookkeeping helpful and critical to survival and success in the industry.

Restaurant bookkeeping involves recording and managing your business’s daily financial activity, including sales data, inventory costs, employee payroll, accounts payable, and more. Done well, it provides clear financial statements like your balance sheet, profit and loss statement, and cash flow statement.

Restaurants are especially vulnerable to accounting errors. With a high volume of vendor bills, cash variances, and multiple revenue streams, a reliable accounting system helps you stay organized, avoid tax liabilities, and improve cash flow management.

Restaurant accounting also supports:

  • Accurate food and labor cost tracking.
  • Better profit margin visibility.
  • Timely payroll tax filings and payroll liabilities management.
  • Reliable daily sales reports and financial data access.

For restaurant owners, solid bookkeeping is the foundation for strong financial performance.

Challenges unique to restaurant accounting

Unlike other industries, restaurant accounting has a set of built-in complexities. 

Here are the ones every restaurant manager needs to stay ahead of:

  • Cash handling: Daily reconciliations are essential to match POS reports, bank statements, and credit card fees.
  • Food inventory: Tracking food inventory across perishable goods and suppliers requires precision to avoid losses and understand inventory management needs.
  • Labor compliance: From tipped wages to overtime, restaurant payroll gets complicated fast. Managing payroll accurately is essential to staying compliant.
  • Prime costs: These include food costs and labor—often 60-65% of a restaurant’s total operating expenses.
  • Accrual accounting: Restaurants benefit from accrual accounting, which matches income with expenses, especially when managing vendor bills and accounts payable.

The margin for error is thin. One missed payment or poorly categorized expense can affect your net profit, gross profit, and overall financial statements.

Core components of a restaurant accounting system

A good accounting system shouldn’t just track numbers—it should give you confidence that nothing’s falling through the cracks. 

Here’s what to look for:

  • Automate bookkeeping where possible to reduce manual errors.
  • Track gross revenue and categorize sales by channel (dine-in, takeout, delivery).
  • Monitor income statements monthly to assess profit margins.
  • Use restaurant accounting software that integrates with your POS system.
  • Establish a clear accounts payable process to manage vendor bills efficiently.
  • Produce regular financial reports, including your P&L, balance sheet, and cash flow statement.
  • Schedule bank statement reconciliations weekly or biweekly.

Whether you’re reviewing your net income or evaluating restaurant expenses, your accounting system should give you reliable, instant visibility.

Common restaurant bookkeeping mistakes to avoid

Restaurant owners often encounter familiar challenges when managing their books. One of the most common mistakes is mixing personal and business expenses, which muddles financial clarity and makes it harder to prepare accurate reports. 

Others delay financial reporting altogether, leaving them without a clear view of their performance until it’s too late. Mismanaging payroll taxes or classifying employees incorrectly can also create compliance issues that lead to costly penalties. 

When inventory costs or vendor payments aren’t properly tracked, profit margins become unreliable. If left unaddressed, each of these issues can weaken a restaurant’s financial foundation.

All of these issues can lead to inaccurate financial statements, unexpected tax liabilities, or even cash shortages. Good restaurant bookkeeping solves these issues by keeping your books clean and current.

Why work with a professional restaurant accountant

Accounting software has its place, but it can’t replace experience. When your margins are tight and your time is limited, you need more than tools. You need a professional who understands the day-to-day realities of running a restaurant and can help you make sense of the numbers behind it.

Working with a restaurant accounting expert means you’re not left guessing. You get clear answers, fewer surprises, and a system that actually supports your decisions.

A restaurant accounting partner helps you:

  • Build a custom chart of accounts for food, labor, and operating costs.
  • Prepare accurate income statements and track key gross profit and net income metrics.
  • Manage accounts payable and employee payroll without missing deadlines.
  • Avoid cash flow issues by forecasting and monitoring variances.
  • Stay compliant with payroll liabilities and tax regulations.

They also help restaurant managers spot trends, control restaurant expenses, and improve decision-making. In short, they help you run a more successful business.

When to bring in expert support

If the bookkeeping process feels overwhelming—or you’re constantly chasing reports, managing inventory issues, or juggling payroll—it might be time to bring in expert support.

This is especially true if you’re trying to improve financial performance but don’t have accurate sales data to guide your decisions.

Outsourced bookkeeping for small businesses is a smart way to save time, reduce errors, and get access to financial expertise without hiring in-house. For restaurants, especially, outsourcing means you’re not alone in handling complex payroll rules, inventory tracking, or tax deadlines. Instead, you get experienced support that keeps your books clean and your operations on track.

Partnering with a bookkeeping team that knows restaurants will help you organize accounting processes and keep your financial health on track.

How Archer Lewis helps restaurant owners

At Archer Lewis, we specialize in restaurant bookkeeping and accounting. Our services are designed to reduce stress and bring structure to your books.

We work with restaurant owners and managers to set up smart, sustainable accounting systems that support daily sales tracking, food and labor cost analysis, and clear, accurate financial reporting. We also help you manage restaurant payroll, manage restaurant accounting software, and optimize your accounts payable process.

Most importantly, we help you understand your numbers so you can focus on food, staff, and service.

Let’s simplify your restaurant’s finances

 You’ve got enough on your plate. Between managing staff, vendors, and the daily rush, tracking every dollar shouldn’t be a full-time job. If you’re struggling with restaurant bookkeeping or just want better clarity around food and labor costs, it might be time for a change.

At Archer Lewis, we help restaurant owners clean up their books, organize their numbers, and protect their restaurant’s financial health. From payroll and inventory to vendor bills and financial transactions, we’re here to make the complex feel manageable.

Start a conversation with our team. We’ll build a system that fits your business, gives you real visibility, and frees you up to focus on what you do best—serving your customers.

The Ultimate Guide To Restaurant Accounting

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Running a restaurant takes grit, precision, and a thousand decisions a day. Behind every plate served is a complex web of numbers that can either support your growth or hold it back. For restaurant owners, staying ahead of rising monthly or annual expenses, staff turnover, and inflation isn’t just about good instincts. It comes down to having reliable restaurant accounting systems in place.

You’re dealing with nonstop financial data, fluctuating costs, and tight margins that leave little room for error. Without a solid handle on cash flow and reporting, even profitable restaurants can start to feel unstable.

That’s where efficient restaurant accounting becomes a must-have—not a nice-to-have. When done right, it keeps you compliant with Generally Accepted Accounting Principles (GAAP), protects your financial health, and gives you the confidence to make smarter business decisions every day.

What restaurant accounting really means

Restaurant accounting is the structured process of recording, analyzing, and interpreting financial data within your restaurant business. It goes beyond restaurant bookkeeping—you manage revenue streams, track labor and food costs, handle financial transactions, and monitor operating expenses in real time.

Consider this: restaurant owners today don’t just deal with standard customer ebbs and flows. They’re struggling to survive due to labor costs and inflation, slim margins, rising expenses, complex inventory, and a high volume of financial transactions. 

These challenges make restaurant accounting more than a back-office task—a strategic function that directly influences daily operations and long-term success.

Unlike other businesses, restaurants use specific accounting methods to address daily sales fluctuations, tip reporting, and vendor credits. Many also operate on weekly accounting periods to better match costs and income. 

Whether you use the accrual accounting method or the cash-basis accounting method, your accounting system needs to support the business’s financial status in a way that encourages informed financial decisions.

Core components of an effective restaurant accounting system

Every restaurant should establish a system that covers the full spectrum of accounting processes to maintain financial performance. 

Here are the key elements to build around:

  • Chart of accounts: Your accounting system should start with a well-defined chart of accounts that separates business costs into specific categories such as food costs, labor costs, and inventory expenses.
  • Restaurant accounting software: Leverage tools that connect with your restaurant’s point of sale system, allowing for automatic data syncing and simplified reporting.
  • Payroll processing: Managing payroll taxes, employee wages, and tip distribution is central to staying compliant.
  • Cash flow statements: Use real-time reporting tools to track gross revenue and manage your cash flow effectively.
  • Detailed financial reports: These include your profit and loss statement, balance sheet, and other key financial reports that provide a full picture of your financial health.
  • Inventory management: Control the cost of goods sold (COGS) and food inventory closely to avoid waste and protect profit margins.
  • Bank accounts and reconciliation: Regularly reconcile accounts to catch errors and maintain clean records.

Together, these tools and practices form the basis of proper accounting practices that empower restaurant owners to make smart financial choices.

Where restaurants get stuck (and how to fix it)

Even with accounting systems in place, restaurants often hit snags that affect profitability. The most common accounting method for small restaurants—the cash method—can work for some, but others benefit more from accrual accounting. Even the best food and service can’t overcome financial inefficiencies without the right setup.

Common pitfalls include:

  • Combining finances between business and personal accounts.
  • Delaying financial reporting or bookkeeping updates.
  • Improper tip classification or underreporting.
  • Cash management issues that create gaps in liquidity.

Using general accounting software or relying on a bookkeeper unfamiliar with restaurant accounting methods can lead to inaccurate reports and missed opportunities.

Partnering with restaurant accounting professionals

There are many benefits of hiring an accountant who understands the specific demands of the restaurant business. From navigating compliance requirements to helping with forecasting and growth planning, a specialized partner can be a game changer. If you’ve worked with generalists or explored small business accounting companies that didn’t quite fit, it might be time to look at industry-specific expertise instead.

Many restaurants choose to work with accounting professionals or accounting firms specializing in the restaurant industry. These experts bring experience, systems, and restaurant management software that streamline financial management and align with proper accounting standards.

Working with restaurant accounting experts offers more than just outsourced number crunching. You gain access to accounting solutions tailored to the unique challenges of the restaurant industry. That includes tools that simplify complex financial tasks and provide consistent, clear accounting reports to support smarter cash flow management. 

These professionals also manage the finer details—like vendor payments, prepaid accounts, and tip tracking—so nothing slips through the cracks. Perhaps most importantly, they offer strategic tax planning and help you monitor essential financial metrics like your net profit margin and prime cost, allowing you to make informed decisions that keep your restaurant on a path to growth.

Instead of just tracking data, accounting services help you interpret financial data and apply it to day-to-day decisions.

When to bring in an expert

If your current system isn’t helping you improve cash flow, produce timely financial statements, or reduce restaurant expenses, it may be time to bring in outside help. 

Look for signs like:

  • Inconsistent or late financial reports.
  • Confusion over payroll taxes or classification.
  • Uncertainty about your net profit.
  • Lack of clarity on operating costs or the business’s financial status.

Working with an expert helps you create a system that delivers clear, timely, and reliable information to support better business decisions.

Why Archer Lewis is the right fit for restaurant accounting

At Archer Lewis, we specialize in efficient restaurant accounting that supports growth, compliance, and clarity. We build accounting systems that simplify everything from bank account reconciliation to cash flow management.

We don’t just handle the numbers—we help restaurant owners understand them. Our accounting services cover everything from setting up your chart of accounts to interpreting financial data and producing high-quality financial reports.

If you’re ready to stop stressing over spreadsheets and start making more informed financial decisions, it might be time to explore how Archer Lewis can support your restaurant’s financial success.

Let’s talk about your restaurant’s financial future

You’ve got the food, the team, and the vision. Now you need a financial system that keeps up. If your current setup is leaving you guessing—or worse, missing key numbers—it might be time for a change.

Talk to our team today. We’ll help you turn your financial data into insights, clean up what’s not working, and give you the support to focus on what matters most: running your restaurant.

person doing monthly accounting on a calculator

Monthly Accounting Overview & Key Tasks

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There’s no shortage of things to do while running a small business. And when you’re focused on the day-to-day, it can be too easy for your monthly accounting to slip through the cracks. 

But accounting isn’t just necessary for compliance—it’s essential for your business’s success. Staying on top of your finances monthly helps avoid tax-time panic, supports better decision-making, and keeps cash flows on track.

This guide is specifically designed for small business owners who feel overwhelmed by the accounting side of things and want to take control of their finances. 

We’ll break down all the key monthly accounting tasks you should be on top of, and provide tips for simplifying the process (including when to ask for help).

What exactly is monthly accounting?

Monthly accounting simply refers to reviewing, organizing, and updating your financial records each month. It means taking time to track what money is coming in, what’s going out, and where it’s going, so you always have a clear picture of your financial health and stay on top of your overall business finances. 

Think of it as giving your business a regular financial checkup. It gives you a pulse on your finances, helping you make smart spending decisions, plan for growth, and spot financial issues early on. 

Immediate and long-term benefits of monthly accounting

Taking a little bit of time each month to stay on top of your accounting can pay off quickly, both now and down the road. Even if you’re overwhelmed, monthly accounting offers quick wins leading to peace of mind and smarter financial planning. 

Here’s what regular monthly accounting can do for your small business:

  • Avoid tax-time panic: No more scrambling to find receipts or make sense of backlog transactions come tax season. With proper accounting, you can avoid costly tax mistakes (the IRS collects billions of dollars in employment tax penalties yearly) and stay ahead of your potential tax liability. 
  • Keep cash flow steady: Spot cash slowdown or gaps in income early, so you can adjust before a crisis hits and track cash flow trends over time to anticipate challenges. 
  • Make smarter decisions: Up-to-date financial information allows you to confidently plan spending, set prices, and make more informed future business decisions.
  • Catch errors before they snowball: Fixing a small mistake from the previous month is much easier than finding it later. 
  • Build investor and lender confidence: Clean, consistent accounting makes applying for loans easier and appeases investors because investors and lenders rely on accurate financial statements. 

Core tasks involved in monthly accounting

Not sure what monthly accounting should really look like for your business? Here are the main tasks.

Review financial transactions and reconcile accounts

One of the most important steps in monthly accounting is reviewing your financial activity in detail. This means going through transactions from your bank accounts, credit cards, and loan activity, and don’t forget to reconcile cash accounts for a complete picture.

You should categorize all income and expenses, adjust entries in your accounting, match transactions to receipts and invoices, including gathering and organizing all expense receipts, and reconcile accounts to bank/ credit card statements. 

Reviewing transactions in this manner allows you to spot errors, catch potential fraud, understand the state of your finances, and maintain the integrity of your financial data. 

Update and analyze financial statements

The next step is updating and analyzing your monthly financial statements and generating timely financial reports. Regular financial analysis of your statements helps you spot opportunities, reduce risks, and stay ahead of economic challenges.

These should include the following core reports: 

  • Profit and loss statement (P&L): This shows your income and expenses over a set period of time. It helps you answer the question: Are you making more than you spend?
  • Balance sheet: The accounting balance sheet shows what your business owns (assets) versus what it owes (liabilities). Make sure to review your balance sheet accounts regularly to maintain accuracy.
  • Cash flow statement: This tracks how cash moves into and out of your business. Can you cover upcoming expenses?

 

With these statements, go beyond numbers alone, and look for trends. Are expenses creeping up? Is income spiking during certain seasons? Which clients are slow to pay? 

Preparing financial statements regularly keeps you compliant and gives you sharper insights into your performance, helping you confidently shape future business decisions.

Record and track receivables and payables

Managing the money coming in (accounts receivable) and going out (accounts payable) keeps your operation moving smoothly and avoids cash flow crunches. If you lose track of either, you might be unable to pay employees or invest in growth, even if you’re paying bills on time. 

Responsibilities include following up on unpaid invoices, recording incoming payments promptly, and regularly review accounts receivable to ensure you’re not missing out on collections.

Pro tip: Set calendar reminders or use accounting software to automate certain tasks to stay organized and ahead.

Review payroll and employee-related costs

Whether you’re a solo business owner or you have a team, payroll plays a key role in compliance and financial stability. 

Every month, you need to:

  • Run payroll accurately and on time.
  • Review payroll tax withholdings.
  • Update any changes to benefits or contractor payments. 

Review business budget vs. actuals

How much is your business spending, and is it within budget? That’s a question you need to answer every month. 

By comparing the budget to actuals each month, you set the stage for more accurate cash flow projections and smarter long-term planning.

Plus, these monthly check-ins help you create more accurate, realistic financial forecasts over time. 

Document notes or changes for your accountant

The more information your accountant has, the more you can save time and money and prevent confusion down the road. 

Keeping a simple log of information can help with everything from tax prep to long-term planning, including more effective tax planning and minimizing your tax liability. 

Here’s what to jot down each month: 

  • Major purchases or investments.
  • Loans taken out or paid off.
  • Any unusual income or expenses.

 

By consistently documenting these notes and changes, you make tax prep smoother and support accurate general ledger reconciliation, ensuring that all your accounts align properly. 

This proactive habit strengthens the accuracy of your overall financial records and empowers your accountant to deliver even better insights and guidance for your business.

DIY vs. partnering with an accounting professional

Not sure if you should tackle your monthly accounting the DIY way or partner with an accounting professional? As it turns out, 70% of small businesses don’t have an accountant. 

In some situations, it might be better to handle your accounting in-house—let’s say, if you’re a new business or your finances are simple. 

However, as your business grows, so does the complexity of your accounting needs. Eventually, doing it all yourself can lead to missed opportunities, costly mistakes, and unnecessary stress.

So, how do you know when to bring in a professional? If you’re struggling to keep up with these tasks every month, second-guess your reporting, or find that accounting tasks are eating into time you should spend on your business, it’s time to call in support. 

How Archer Lewis can lighten the load

If you’re looking for your next trusted accounting partner, Archer Lewis is here to help. We’re more than just another firm: we’re dedicated to your long-term growth, instead of just tax-season help. 

Our bespoke accounting services are designed for businesses just like yours and include monthly bookkeeping, financial reporting, payroll processing, and strategic planning through fractional CFO support. 

What makes Archer Lewis different? We use a people-first, relationship-driven approach combined with the capabilities of a national network to meet your needs. Our team is available and responsive, and we’re here to help you simplify your financial world. 

Your monthly accounting doesn’t have to be a drag

Monthly accounting might not be your favorite activity, but it’s key to a stable, stress-free business prepared for whatever the future holds. If you feel like you’re in over your head or have fallen behind on your accounting, it’s not too late to get back on track, especially with some help.

That’s where Archer Lewis comes in. 

Let’s connect and discuss how we can support your monthly accounting process, so you can focus on what you do best.

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The Ultimate Guide To Medical Practice Accounting

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Running a successful medical practice means balancing exceptional patient care with all the responsibilities of managing a business. But when the days get busy, medical practice accounting often falls to the bottom of the list.

Here’s the truth: clear, reliable medical accounting isn’t just about staying compliant. It’s the backbone of a successful medical practice. The right accounting method supports growth, reduces stress, and helps you avoid costly surprises — whether you’re managing a solo clinic or a large, multi-provider group.

Not sure where to start or how to choose the right accounting method for your practice? You’re not alone. This guide breaks down the essentials of medical practice accounting, explains why healthcare practices have unique needs, and shows how partnering with the right advisor can make all the difference.

Why medical practices have unique accounting needs

Your medical practice isn’t like other typical small businesses, and your accounting needs reflect that. Medical practice accounting requires specialized knowledge and precision, from how you earn revenue to how you handle payroll and taxes.

Some specific medical accounting challenges include:

  • Manage multiple revenue streams (insurance, patient payments, Medicare/Medicaid) and ensure smooth revenue cycle management to maintain healthy cash flow.
  • Handling high-volume invoicing, delayed reimbursements, and accrual accounting (including adjusting entries in accounting).
  • Navigating complex tax regulations and payroll structures (especially for contractors vs. employees).

 

These aren’t your run-of-the-mill accounting challenges. Some practices may also use cash-basis accounting, depending on the right accounting method for their needs. 

Because of that, they need to be handled by those with industry-specific accounting experience to avoid compliance risks and lost revenue. 

That’s where proper financial management and accounting practices come into play. 

Key components of effective medical practice accounting

Proper medical practice accounting involves more than just basic number-crunching. Here are the key components of healthcare accounting every business should have in place.  

Bookkeeping

Accurate, daily medical practice bookkeeping is essential for tracking financial transactions, categorizing income and expenses, and maintaining accurate financial records. 

Consistent bookkeeping ensures your financial data is up-to-date, which helps you monitor cash flow, prepare for tax season, and make informed business decisions throughout the year. Accounting and bookkeeping services usually go hand-in-hand. 

Payroll and benefits

Timely payroll processing and employee benefits compliance are crucial for keeping your staff happy and your practice running smoothly. Your medical practice might have a mix of salaried employees, hourly workers, and independent contractors, further complicating payroll and benefits management. Keep in mind that the IRS collects billions of dollars per year in penalties associated with employment taxes alone. 

Tax preparation and planning

Quarterly and annual tax filings are vital, as are proactive strategies to reduce liabilities. With the right financial planning in place, you can minimize surprises, lower your tax burden, and align your tax approach with your long-term business goals. 

Financial reporting

Accurate financial reports—such as clear income statements and financial statements, cash flow reports, and balance sheets—offer a clear snapshot into your practice’s financial performance. 

These reports are essential for tracking profitability, identifying trends, and guiding strategic decisions (such as whether you can afford to invest in that new equipment you’ve been eyeing). 

Account reconciliation

Regularly reconciling bank accounts, medical billing software, credit cards, and vendor balances ensures your records are accurate and complete. This helps catch and prevent situations like billing errors or fraud, and maintains trust in your financial data.

Common mistakes that hurt medical practices financially

Even the best medical practices can run into financial trouble—not because of poor patient care or a lack of medical expertise, but because of avoidable accounting missteps. 

Studies show that almost half of small businesses don’t use an accountant or bookkeeper and that one quarter of small businesses still record their finances on paper (instead of using a computer).

Mistake #1: Relying on generalist accountants

Medical billing is complex and specific, and not every accountant can handle it. Generalist accountants might miss critical details, from coding errors to unclaimed reimbursements. 

Instead, when you choose an accountant with medical expertise, they know the nuances of your accounting needs and ensure you’re both legally compliant and financially sound. 

Mistake #2: Not separating personal and business finances

Medical professionals can sometimes (accidentally) mix their personal and business finances, such as through shared bank accounts and credit cards. 

This makes it harder to track deductions, prepare taxes, and measure your practice’s financial health. When you blur these financial lines, you increase your audit risk and make it difficult to make informed business decisions.

Mistake #3: Failing to reconcile accounts or track reimbursements accurately

Without regular reconciliation, billing errors, missed payments, and fraud can go unnoticed, and accounts receivable balances can become outdated or incorrect. 

Plus, medical practices often deal with delayed insurance payments; if they’re not tracked properly, revenue can quietly leak out. These lapses could leave some serious money uncollected, impacting cash flow and long-term viability. 

Mistake #4: Waiting until tax time to look at finances

Many medical practices only look closely at their books when filing taxes. But that can lead to a last-minute scramble, where it’s too late to make strategic adjustments and mistakes slip through the cracks. Instead, ongoing proactive financial oversight allows for better planning, smarter decisions, and fewer surprises come tax season. 

How medical practice accounting supports growth and compliance

Airtight medical practice accounting is a powerful tool for growing your practice and staying compliant, even in an increasingly complex healthcare environment. 

Wondering how? 

Solid accounting helps with:

  • Hiring and expansion planning: Are you thinking about hiring a new provider, adding staffing, or opening a new location? Reliable cash flow tracking and financial forecasting help you understand whether your practice can afford it and avoid putting unnecessary financial strain on your operation.
  • Avoiding IRS audits and financial penalties: Medical practices can face heightened scrutiny from tax authorities due to their mix of income sources and complex payroll structures. But accurate records and timely tax filings help you stay compliant and minimize the risk of audits or penalties. 
  • Planning for new equipment purchases or service lines: We don’t have to tell you how pricey medical equipment can be. Whether you’re investing in new diagnostic equipment or launching a new specialty service, proper accounting helps you evaluate your budget and ROI, and time your purchases wisely. 
  • Managing debt and credit effectively: Medical practices often take on loans for equipment, renovations, or expansions. A clear picture of your debt obligations, interest rates, and repayment schedules helps you manage those commitments (without overextending).

Example: Why Sector-Specific Accounting Matters

For example, a small dermatology clinic expanding to offer cosmetic services might need to evaluate the cost of new equipment, hire additional staff, and navigate changing payer contracts — all while managing existing patient care. Without specialized accounting support, it’s easy to miss tax-saving opportunities, overextend cash flow, or delay growth plans.

Ultimately, the formula is simple: financial clarity = less stress and smarter business decisions.

How Archer Lewis helps medical practices thrive

At Archer Lewis, we understand the unique challenges of medical practice management accounting because it’s one of our core specialties. We provide tailored financial solutions designed specifically for busy medical professionals, with a deep understanding of medical billing complexity, payer systems, and practice operations.

When you partner with Archer Lewis, you gain more than just accounting services — you gain a human-first team of dedicated advisors who communicate clearly, respond promptly, and help you stay financially healthy year-round.

Our specialized services for medical practices include:

  • Fractional CFO support for larger practices
  • Tax resolution and planning for high-income practitioners
  • Bookkeeping cleanup for practices behind on records

 

Wondering whether to handle your accounting in-house or partner with a fractional expert? This guide to in-house vs. fractional accounting can help you weigh the right approach for your practice.

We’ve got your medical practice accounting covered

Accounting might not feel like the most urgent task in your day-to-day operations, but for healthcare practices, it’s a key part of running a healthy business. When done right, it empowers you to focus on patient care instead of paperwork, with fewer financial surprises and more peace of mind.

If your accounting needs feel overwhelming, you’re not alone — and you don’t have to figure it out by yourself.

Think of us as your trusted, caring fractional accounting partner, here to deliver tailored financial support for healthcare practices like yours.

Let’s connect about how Archer Lewis can support your practice’s financial future and give you the peace of mind you deserve.

Cost Segregation Study: What It Is And How It Works

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You’ve just purchased a commercial property to help your business grow. You’ve spent months planning, budgeting, and negotiating the loan. 

Now, the space is yours—but beneath the excitement, you may not realize there are tax strategies you could use to strengthen your bottom line. Without them, you could miss early opportunities to improve cash flow and boost your tax savings.

A valuable yet often overlooked opportunity is the cost segregation study. This tax planning tool allows property owners and real estate investors to reclassify building assets for shorter depreciation schedules. 

Instead of depreciating the full value of a commercial property over 39 years, specific components—like lighting, flooring, and landscaping—can be written off over 5, 7, or 15 years. This accelerates depreciation deductions, reduces tax liability, and frees up capital.

Let’s look at how this strategy works—starting with what a cost segregation study is, who benefits from it, and how to weigh the tax benefits against potential downsides.

What is a cost segregation study?

A cost segregation study is a tax strategy that identifies and reclassifies building components so they can be depreciated over shorter timeframes. Instead of grouping all property costs under a standard 27.5-year or 39-year schedule, this method breaks them down based on how long each part actually lasts.

Under IRS rules, commercial buildings are depreciated over 39 years, and residential rental properties over 27.5 years. But many parts of a property—such as flooring, interior finishes, and certain electrical or plumbing systems—don’t last that long and can qualify for shorter depreciation periods of 5, 7, or 15 years.

A cost segregation analysis separates these faster-depreciating items from the rest of the property, allowing for larger depreciation deductions in the earlier years of ownership. 

The best part? Accelerating depreciation deductions reduces taxable income and improves cash flow.

Qualifying assets often include:

  • Flooring and carpeting.
  • Decorative millwork or cabinetry.
  • Accent lighting and certain electrical components.
  • Outdoor features like sidewalks, signage, and landscaping.

 

This strategy applies to newly purchased, constructed, or renovated properties and is especially valuable for businesses looking to reinvest and grow.

Who should consider a cost segregation study?

Cost segregation benefits businesses and individuals with significant real estate investments. That includes:

  • Property owners with commercial or rental properties valued at $200,000 or more.
  • Real estate investors aim to increase the after-tax return on their holdings.
  • Entrepreneurs seeking ways to optimize tax planning for small businesses.

 

You’re likely a good candidate if you plan to hold the property for several years and want to reduce taxable income in the near term. This is particularly true if you’ve recently purchased, built, or completed renovations on the property.

On the other hand, if you plan to sell the property soon, the benefits may be limited. That’s because the IRS may require you to pay back a portion of the savings through depreciation recapture at the time of sale. This added tax liability can diminish the overall value of the strategy for short-term property holders.

How a cost segregation study works

While every cost segregation study is tailored to the property and business in question, the process typically follows a clear and structured path. Here’s what that process generally looks like and what you can expect along the way.

Step 1: Engaging a cost segregation specialist

The IRS expects technical precision, so working with a cost segregation specialist is best. 

Typically an engineer, accountant, or tax expert with experience in property analysis and depreciation rules, these professionals offer cost segregation services that include:

  • Site inspections.
  • Review of construction documents and blueprints.
  • Analysis of building systems and improvements.
  • Detailed asset classification and cost estimation.

 

To get the most out of the study, businesses should prepare in advance by gathering key documents such as: 

  • Purchase agreements. 
  • Architectural plans.
  • Renovation invoices.
  • Prior depreciation records.

 

This groundwork enables the specialist to complete a more accurate assessment, improve audit readiness, and help you identify meaningful tax-saving opportunities.

Step 2: Identifying and categorizing assets

This phase involves a detailed cost segregation analysis of your property. Each asset is examined to determine its role, expected lifespan, and suitability for accelerated depreciation. 

The process typically classifies components based on the following:

  • Function (personal property vs. structural building elements).
  • Useful life (5, 7, 15, or 39 years).
  • Eligibility for accelerated depreciation deductions under IRS guidelines.

 

Qualifying items often include specialized electrical work, decorative fixtures, removable flooring, built-in millwork, and exterior improvements like parking lots or signage. The more thorough and precise the analysis, the greater the opportunity to reclassify assets to reduce your tax burden early in the property’s lifecycle.

Step 3: Reclassifying assets for faster depreciation

Once categorized, these assets are reclassified for faster write-offs. 

You’ll then:

  • Adjust your current year’s tax filings.
  • Reduce your tax liability.
  • Possibly amend past returns using IRS Form 3115 to capture missed deductions.

 

Accelerating depreciation shifts more expense to earlier years of ownership, resulting in larger upfront deductions and improved short-term liquidity. If done correctly, this step can free up capital for reinvestment and strengthen your financial position without waiting decades to realize the benefits.

Step 4: Applying bonus depreciation (if applicable)

Under current tax law, you may be eligible for bonus depreciation—the ability to fully deduct the cost of eligible property in the year it was placed in service if that occurred before 2023. This provision applies to assets with a recovery period of 20 years or less, including many components identified during a cost segregation study.

The bonus percentage is phasing down gradually each year and will expire after 2026 unless Congress extends it. Consult a tax advisor to determine how much bonus depreciation is still available and how it fits into your broader tax planning strategy. 

Timing matters, so don’t wait too long to evaluate your options.

Benefits of a cost segregation study

A quality cost segregation study can help your business free up capital, reduce tax liability, and improve long-term financial performance.

  • Improved cash flow: Reclassifying assets for shorter depreciation timelines allows businesses to claim deductions earlier, reducing taxable income in the early years of ownership. This creates liquidity that can be used to reinvest in operations, equipment, or hiring.
  • Lower tax bills: Assets depreciated over 5, 7, or 15 years result in significantly larger upfront write-offs than the traditional 39-year schedule.
  • Stronger real estate returns: By optimizing tax savings, cost segregation improves the after-tax return on commercial property investments, helping property owners maximize profitability.
  • Retroactive savings: If you haven’t conducted a cost segregation study yet, you can still take advantage of prior missed deductions. Using IRS Form 3115, you can adjust past returns to capture unclaimed depreciation without filing amended returns.

 

Consider a business that purchases a $1 million commercial building. After completing a cost segregation study, $200,000 in assets are identified as eligible for accelerated depreciation. This adjustment leads to a $50,000 reduction in tax liability in the first year alone—capital that can then be redirected toward operations, hiring, or expansion.

Key considerations and potential risks

The IRS recognizes cost segregation as a legitimate tax strategy, but it has several important considerations that business owners should understand before proceeding.

Here’s what to keep in mind:

  • IRS audit risk: If assets are misclassified or the study lacks proper documentation, it may trigger an IRS audit. Avoiding aggressive estimates and working with a qualified provider helps minimize this risk. A well-prepared study should follow IRS guidelines and be defensible under scrutiny.
  • Depreciation recapture: If you sell the property after claiming accelerated depreciation, the IRS may require you to repay a portion of those tax savings. This process, called depreciation recapture, can increase your taxable gain and reduce the overall financial benefit of the strategy—especially for short-term owners.
  • Short ownership periods: Businesses planning to relocate or sell within a few years may not realize enough upfront tax savings to justify the cost of the study. 
  • Importance of compliance: To structure the study correctly and remain compliant, businesses should always work with a tax professional or accountant for small businesses experienced in cost segregation.

 

As with any planning strategy, cost segregation works best when aligned with your broader goals.

How to get started with a cost segregation study

If you’re considering a study, here’s how to prepare:

  1. Determine if your property qualifies: A strong candidate for cost segregation is typically a commercial or rental property valued at $200,000 or more. Eligibility also depends on how recently the property was acquired, built, or renovated—and how long you plan to keep it. The strategy works best for long-term owners aiming to optimize their tax position over time.
  2. Consult a tax professional or cost segregation expert: Working with a qualified accountant or engineering firm experienced in cost segregation is essential. These professionals will ensure proper asset classification and IRS compliance.
  3. Gather necessary documentation: Before the study begins, organize purchase agreements, construction costs, blueprints, renovation invoices, and previous depreciation schedules. Consider outsourcing accounting for small businesses to help manage and compile these records efficiently if needed.
  4. Understand how to apply tax adjustments: If you haven’t previously applied cost segregation, IRS Form 3115 allows you to claim unrecognized depreciation retroactively without filing amended returns.
  5. Set realistic expectations: Speak with a professional to review your numbers. A qualified advisor can evaluate your property, run projections, and assess whether the tax benefits are worth the investment. Having a current small business financial report will support this analysis.

Maximize your tax savings with Archer Lewis

A cost segregation study is a strategic tool that can help businesses with commercial properties improve cash flow, reduce tax liability, and maximize their real estate investments. However, to achieve meaningful results and avoid missteps, it’s essential to work with experienced professionals.

Explore your property’s full tax-saving potential with the experts at Archer Lewis. 

Schedule a consultation today to see whether a cost segregation study aligns with your overall business goals.

45L Tax Credit: Everything Builders Need To Know

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Everyone wins when new developments or substantial renovations to existing homes prioritize energy efficiency. Society benefits, residents pay lower bills, and developers and builders are rewarded with a tax credit. 

However, these benefits can go unrealized if eligible contractors are unaware of their entitlements.

Section 45L tax credits are cooling energy consumption by incentivizing sustainable construction. To take full advantage of them, builders need to know who qualifies, how the program works, key requirements, and how to claim the credit—all of which we’ll explain below.

What is the 45L tax credit?

The 45L tax credit is a federal incentive that provides builders and developers a tax credit of up to $5,000 per qualifying energy-efficient dwelling unit. 

Under § 45L, newly constructed or significantly renovated residential buildings that meet the Energy Star residential or Zero Energy Ready Home (ZERH) standards and certain other legal requirements are eligible for credits ranging from $500 to $5,000.

Per an Internal Revenue Service (IRS) press release about 45L, the credit was updated in 2023 under the Inflation Reduction Act (IRA). This increased the total possible benefit for homes acquired from 2023 to 2032 to the current amount. Before the IRA, the total credit maximum was $2,000, contingent on similar requirements.

Who qualifies for the 45L tax credit?

As with all tax credits for small businesses, there are strict guidelines on which entities are eligible for the benefit. Put simply, this incentive applies to builders and developers who construct or significantly renovate energy-efficient homes (residential properties).

In particular, the projects eligible for energy-efficient home credits are:

  • Energy Star single-family homes.
  • Energy Star multifamily buildings.
  • Energy Star manufactured homes.

 

The 45L tax credit applies to business entities buying, building, and/or renovating homes—not private homeowners. In cases where the business hires third-party contractors, they (and any contractors they hire, by extension) are not eligible.

Key energy efficiency requirements

As noted, homes must meet certain energy-saving requirements to qualify for the 45L tax credit. 

In particular, two primary standards can apply:

 

The specifications for both standards cover climate zone control (e.g., building envelope, windows, and doors), compliant lighting, appliances, and ductwork, indoor air quality assurances, renewable readiness, and more.

How much is the 45L tax credit worth?

The 45L tax credit is worth a maximum of $5,000 for builders and developers, assuming they meet the requirements. However, the actual amounts can vary.

According to the DOE, single-family homes and manufactured homes are eligible for $2,500 under Energy Star and $5,000 under ZERH. Multifamily homes that meet the prevailing wage requirement (see below) are eligible for $2,500 and $5,000 per unit, respectively, under each program. However, multifamily constructions without prevailing wage protections are only eligible for $500 or $1,000 per unit.

The Prevailing Wage Requirement imposed by the IRS ensures that developers pay laborers fair wages when working on eligible homes. For 45L, this means paying competitive rates indexed against comparable projects and hiring apprentices from registered programs for a pro-rated allotment of hours.

This means that a business that does its i’s and crosses its t’s when building a 50-unit building could earn itself a tax credit worth up to $250,000. 

How to claim the 45L tax credit

To take full advantage of the 45L tax credit, simply follow the steps below.

Step 1: Conduct an energy efficiency certification

Hire a qualified third-party energy rater or certifier to verify that the home meets Energy Star or ZERH standards. This includes onsite inspections and advanced energy modeling projections. 

If you’re seeking the highest possible benefits, be careful about hiring to comply with prevailing wages.

Step 2: Obtain the proper documentation

When preparing to claim the 45L tax credit, you’ll need to maintain records to substantiate claims about efficiency, prevailing wage, and more. Original documents related to the overall construction project, energy audits, tax credit calculations, and salary and benefits benchmarking should be retained in the event of an IRS audit.

Step 3: File for the credit

Ultimately, you’ll claim your 45L tax credit by filing Form 8908 with the IRS. The prior years’ tax returns can also be amended if the benefit would apply to work completed in the past. 

Working with a tax professional or tax preparation outsourcing provider like Archer Lewis is the best way to streamline the process for swift, accurate processing.

Common questions and misconceptions (FAQs)

Make your claim with confidence by familiarizing yourself with the answers to these common 45L questions.

1. Can I claim the 45L tax credit retroactively for past projects?

Yes, 45L tax credits can be applied retroactively. However, this is only possible if they were missed on prior tax documents. In addition, it can be more challenging to file for and receive benefits post-facto; careful year-end tax planning mitigates this risk.

2. Can I claim both the 45L tax credit and other energy incentives?

Yes, developers can still qualify for and receive other tax incentives related to energy, whether or not they’ve claimed the 45L credit—it doesn’t preclude other benefits.

3. Does the 45L tax credit apply only to new construction?

The 45L tax credit applies primarily to new construction, but select renovations are also eligible as long as they’re substantial and meet energy efficiency requirements.

4. What if my project meets some but not all requirements?

To be eligible for the 45L tax credit, projects must meet the full Energy Star and/or DOE ZERH requirements. The former has a lower bar to entry (and dollar value).

5. How does prevailing wage affect multifamily developers?

Prevailing wage requires multifamily developers to pay fair market wages to all laborers involved in a project to be eligible for the full per-unit credit of $5,000.

Maximize your tax savings with expert guidance

Builders and developers looking to reduce costs should consider using energy-efficient methods (and meeting prevailing wage guidelines) to qualify for the 45L tax credit. By incentivizing these practices, the program rewards businesses for making the world a better place—so long as they recognize and realize the benefit.

Archer Lewis helps builders through the whole process, from determining tax credit eligibility to preparing for energy audits and then filing Form 8908 with the IRS. To learn more about how we can help, check out resources such as our tax credit guide.

Get in touch today to discover the difference working with Archer Lewis can make.

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How To File An Extension For Business Taxes: Using Form 7004

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When it comes to tax filing deadlines, it’s not uncommon for small business owners to realize far too late that they won’t have all their financial records ready in time. In some cases, this can lead to hefty fines and penalties.

However, this situation doesn’t have to result in wasteful spending.

Knowing how to file an extension for business taxes using Form 7004 is a common, useful option for small businesses—although it takes a careful approach to ensure it’s done correctly. An extension won’t push back the payment deadline, but it gives businesses more time to handle the logistics of processing documents for compliant returns.

Below, we’ll explain the form, why you may need one, how to fill it out correctly, and what to expect afterward. We’ll also address some common pitfalls and FAQs so you can confidently move forward.

What is Form 7004?

Form 7004 allows businesses to extend their tax filing deadlines with the Internal Revenue Service (IRS). In particular, it grants a six-month automatic extension for deadlines for documents related to business income tax and more.

This benefit applies to many entities, including estates, partnerships, and limited liability corporations. Notable exceptions include documents related to personal income taxes (Form 1040) and payroll taxes for employees (Forms W-2 and 941).

Form 7004 itself lists applicable tax situations, including but not limited to:

  • Corporations’ income taxes (Form 1120 and variants).
  • Estate-based income taxes (Form 1041 and variants).
  • Generation-skipping transfer taxes (Form 706-GS and variants).
  • Partnership income and withholding (Forms 1065 and 8804).
  • Various excise taxes (Forms 8612, 8613, 9725, 9976, 8924, and 8928).

 

Most businesses receive the extension automatically if Form 7004 is submitted correctly. However, it should be noted that this extension does not apply to any payments; these still need to be made on time, regardless of the filing deadline.

Remember: Form 7004 is a filing extension, not a payment extension.

Why you might need a tax extension

Businesses might need to use Form 7004 if they need extra time to file their tax documents. This is most often due to incomplete financial records, but other situations can arise that make filing on time difficult.

For example, large financial transactions may be pending, which would complicate or invalidate existing records. Records may also need professional review after an abnormal year or quarter.

Certain tax planning strategies, such as diligently applying deductions and credits, simply take time to complete. This is especially true for businesses experiencing rapid growth or other irregularities while trying to manage tax prep internally.

There’s also the cost consideration. Failing to file taxes before the deadline or filing inaccurately can result in fines and penalties that make the extension appealing.

Step-by-step guide to filing Form 7004

Understanding the process is essential if you’re looking to secure an extension for your business tax filings. Here’s a detailed step-by-step guide to filing Form 7004, ensuring that you have all the necessary information to navigate this important task efficiently.

Step 1: Determine if your business qualifies for an extension

First, determine whether Form 7004 applies to your business’s situation. Part I of the form assigns applicable tax return documents that code filers must fill out. If your business’s tax form does not appear, you may not be eligible.

The forms you use also determine the deadline for tax filing. For instance, most S corporations need to file by March 15, but C corporations typically have until April 15.

Step 2: Gather your business information

If your business is eligible, compile all the information you need to file Form 7004 correctly. This includes your EIN, legal business name, the tax form you will file, and an estimated tax liability for the tax year. Tax software and tax preparation outsourcing providers can help you streamline this step.

Step 3: Complete Form 7004

With the information in tow, fill out the key sections of Form 7004 and review it for accuracy. The most challenging and high-stakes part is likely the tax liability estimation across lines 6 and 7. Quality accounting and bookkeeping services for small businesses take the guesswork out of estimated taxes and credits.

Step 4: File Form 7004 before the tax deadline

Next, you’ll need to submit Form 7004 to the IRS by your deadline. The IRS’s instructions on filing Form 7004 detail how and where to mail the form, depending on specifics like the entity type and business location. Other options include working with a tax preparer who will file it on your behalf or utilizing the IRS’s e-filing system.

Filing after the deadline will almost certainly result in the extension being rejected.

Step 5: Pay any taxes owed

While filing Form 7004 gives businesses more time to file their returns, they must still pay their estimated taxes by the original deadline to avoid penalties. This means estimating accurately and sending a payment by check, electronic funds transfer, or other channel with enough time to spare so it posts on or before the due date.

To ensure accuracy, consider working with a service provider and leveraging all technological support. Reviewing calculations and books against a bookkeeping cleanup checklist will provide assurance before final submission.

What happens after filing?

After filing Form 7004, businesses should focus on estimating and paying their tax burden. The IRS does not confirm that the extension has been granted, so businesses should assume that it has unless the IRS reaches out.

Returns still need to be filed before the extended due date six months later, or else a late filing penalty may apply. This can also happen if an extension request is denied.

If the IRS does not grant the extension, it is likely due to one or more inaccuracies in Form 7004 or the submission process. For instance, an incorrect Employer Identification Number (EIN) or a late submission could lead to rejection.

Businesses that have their extension granted still need to be vigilant about paying the right amount and on time. If they discover later that they have underpaid their taxes, they should prepare for interest and fines to apply to the remaining balance.

Mistakes to avoid when filing an extension

The biggest pitfalls of Form 7004 are closely aligned with the most common IRS penalties businesses fall into. In general, they involve timeliness and organization.

The most common mistakes businesses make concerning Form 7004 are:

  • Missing the extension deadline: Even though Form 7004 gives businesses more time to file their full return, the form still needs to be filed by either March 15 or April 15, depending on the business entity, among other factors.
  • Underestimating tax liabilities: Fines and interest accrue if businesses fail to pay enough before the original deadline. Accuracy is as critical as timeliness.
  • Submitting incorrect business details: The information provided about the business is another area where accuracy and attention to detail matter. Any errors in the EIN, tax form selection, and entity classification can cause issues.
  • Assuming the extension covers tax payments: Form 7004 extends the filing deadline, not the payment due date. Unpaid taxes must still be paid on time.

 

The best way to avoid these is to work with a quality tax preparation service.

FAQs about business tax extensions

As businesses navigate the complexities of tax requirements, it’s common to seek clarity on various aspects of filing. One frequently asked topic is the process and implications of business tax extensions. Below, we address some of the most common questions regarding this important aspect of tax management.

1. Does filing Form 7004 give me more time to pay my taxes?

No, filing Form 7004 has no impact whatsoever on when tax extension payments are due, nor how much is due at that time. All taxes must still be paid by their original due dates.

2. How long is the extension for business tax returns?

If approved, form 7004 provides an automatic 6-month extension for filing business income tax returns (and other related tax return documents).

3. Can I e-file Form 7004?

Yes, businesses can e-file Form 7004. Business owners should follow the IRS’s in-depth instructions for e-filing and consider working with a professional.

4. What happens if I file Form 7004 late?

Failing to file Form 7004 before the deadline can result in the IRS charging interest and penalties, which could expose the business to greater scrutiny in the future.

5. Does the IRS notify me if my extension is approved?

No, the IRS does not provide notice when a federal extension is approved. Instead, the extension is automatic, and the IRS only reaches out if it has not been approved.

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If your business needs extra time to gather information before an upcoming tax filing deadline, the Form 7004 extension request is one of the best ways to avoid fines and penalties. It gives businesses extra time to get their files in order, estimate liability, and pay their taxes. However, accuracy and timeliness are critical to approval.

To avoid issues, file Form 7004 by your business’s effective due date and pay your taxes by their deadlines—or suffer penalties and interest. Working with a qualified accountant is the best way to file, estimate your liability, and pay efficiently.

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The average cost of tax preparation by a CPA for a small business

Tax preparation is a critical responsibility for small business owners, often ranking high among the most challenging tasks. Particularly with tax laws frequently changing, partnering with a Certified Public Accountant (CPA) can provide much-needed clarity and peace of mind.

A CPA’s expertise goes beyond basic tax filing. They ensure compliance with ever-changing regulations, optimize deductions to lower your small business tax return fees, and offer strategic advice that supports long-term financial health.

The average cost of tax preparation by a CPA for a small business varies according to the complexity of your tax situation, location, and the services you require. But understanding these fees is essential for effective budgeting and decision-making.

For small businesses, choosing the right CPA isn’t just about today’s tax season—it’s about building a foundation for sustainable growth. Let’s explore the costs and benefits in detail to guide your decision-making.

Average CPA tax preparation costs

The average cost of tax preparation can vary widely depending on several factors, so let’s dive into a tax preparation cost breakdown to help you understand what to expect:

  • National average costs: According to the National Society of Accountants, preparing a Form 1040 with Schedule C (the form businesses use to report profits and losses to the IRS) costs an average of $457. Simple Form 1040 filings cost approximately $220 without itemization, while itemized versions average $323.

  • Regional differences: The cost of filing a state tax return can vary regionally:
    • Midwest region: Known for its affordability, the Midwest often has lower tax preparation costs, with fees for small business filings averaging around $300–$400.
    • South Atlantic region: Moderate pricing around $350 for standard small business filings.
    • Pacific region: Higher fees, often exceeding $500 for comprehensive returns.
  • Simple vs. complex filings:
    • Simple filings: If your business has minimal deductions and straightforward income, expect lower fees, often around $200-$300.
    • Complex filings: Businesses with multiple income streams, significant deductions, or intricate asset management may see costs rise to $1,000 or more.
  • Additional charges:
    • Consulting services: Average rates hover around $150/hour for tax consultations.
    • Amendments to returns: Depending on the complexity of the changes required, fees typically range from $50 to $300.
    • Disorganized records: Clients with incomplete or poorly organized files often face an additional fee averaging $165.

Understanding these factors can help you estimate your annual tax preparation costs and plan effectively for your business’s financial health. By knowing the average cost of CPA services and identifying your specific needs, you can make informed choices that align with your budget and goals.

CPA vs. tax preparation software costs

Tax preparation software, such as TurboTax or H&R Block, provides a budget-friendly alternative to working with a CPA.

These tools typically cost between $60 and $130 for small business editions, making them attractive for those exploring tax filing options for small businesses with straightforward needs.

However, software has its limitations. It doesn’t offer personalized advice or adapt well to complex financial scenarios. For small businesses facing complicated tax situations, tax preparation services costs associated with hiring a CPA can ultimately save money by optimizing deductions and ensuring compliance with tax laws.

CPA vs. enrolled agent costs

Enrolled agents, or federally authorized tax practitioners, offer another option for tax preparation. While they often charge less than CPAs, their scope of expertise may not extend beyond taxes.

Conversely, CPAs offer a broader skill set, including strategic financial planning and business advisory services. When evaluating CPA vs. tax preparer costs, businesses often find a CPA worthwhile for their expertise and lasting financial value.

Outsourced CPA vs. in-house accountant costs

Hiring an in-house accountant—who may also be a CPA—means committing to salary, benefits, and training expenses, which can strain small business budgets. Outsourcing your tax preparation to a CPA, on the other hand, offers a more cost-effective alternative.

With options like flat-fee pricing, an outsourced CPA provides expert tax guidance without the ongoing overhead of a full-time employee, helping you manage resources more efficiently.

Factors influencing CPA tax preparation costs

Several key factors influence tax preparation costs, including the complexity of your finances, your business location, the CPA’s experience, and the specific services you require.

Before choosing a tax preparation partner, be sure to consider:

  • Tax return complexity: A business’s financial complexity significantly impacts its tax return efforts and costs. Simple returns with few deductions typically cost less, while intricate finances—like multiple income streams or extensive deductions—require more time and expertise, increasing fees. The more complex your return, the higher the accurate and compliant preparation cost.
  • Business location: Geographic location plays a significant role in tax preparation costs. Urban areas often have higher rates due to increased demand and operational expenses, while rural locations may offer more competitive pricing. These regional differences highlight the importance of considering where your business operates when planning for tax preparation costs.
  • CPA experience: A CPA’s experience significantly influences tax preparation costs. With their extensive knowledge and proven track records, seasoned CPAs often charge higher fees. However, this investment adds value: better ensuring compliance, optimizing deductions, and providing strategic insights.
  • Hourly rates vs. flat fees: CPA pricing for small businesses can vary significantly between hourly rates and flat fees. Hourly rates can escalate for complex tasks, while flat fees are generally less expensive for predictable services. Knowing your needs upfront helps determine the best option, ensuring transparency and effective budgeting.

  • Frequency and types of services: The frequency and types significantly influence tax preparation costs. More frequent services result in higher expenses, while additional services like year-end tax planning or audit support typically cost more. However, bundling services can help small businesses reduce fees and streamline financial management.

How to reduce CPA costs for tax preparation

Reducing the cost of small business tax preparation starts with proactive management, including staying organized, understanding obligations, and bundling services. The following tips can help you proactively manage your tax preparation process and control costs.

Organize your financial records

Keep receipts, invoices, and bank statements well-organized throughout the year. Organized financial records reduce your CPA’s workload and lower preparation costs. Use tools to track expenses, create digital backups of important documents, and establish a monthly routine for reconciliation to maintain accuracy and efficiency year-round.

Understand tax obligations

Understanding your tax obligations is essential for avoiding penalties and maximizing savings. Start by familiarizing yourself with filing deadlines and requirements. Tools like the IRS Small Business Tax Guide provide clear guidance. Consider consulting a CPA for advice tailored to your unique circumstances, ensuring compliance and optimal financial planning year-round.

Bundle services

Many CPAs offer discounts when combining tax preparation with other services like bookkeeping or payroll. Bundling services can significantly reduce the accountant cost for small business taxes while streamlining financial management. Additionally, exploring bundling options can help small businesses lower CPA fees for tax filing, providing both convenience and cost savings.

Benefits of using a CPA for tax preparation

Partnering with a CPA offers significant advantages, including ensuring regulatory compliance, optimizing deductions, and providing expert financial insights that support immediate and long-term business growth.

Accuracy and compliance

CPAs ensure your taxes are prepared accurately and comply with all regulations. This level of assurance provides peace of mind during tax season, eliminating fears of making costly mistakes or facing an audit. With a CPA, you can confidently focus on running your business, knowing your tax obligations are expertly managed.

Strategic financial advice

CPAs provide insights beyond tax preparation, helping you optimize taxes through tailored strategies and expert advice. Their expertise in tax planning ensures businesses maximize deductions and minimize liabilities. This proactive approach delivers long-term financial benefits, setting a solid foundation for sustained growth and financial health.

Time savings

As tax professionals, CPAs take the burden of handling complex tax tasks off your plate, preparing tax returns much faster than those inexperienced. Accuracy and compliance remain the top reasons businesses seek professional help, but maximizing deductions and credits are just as important.

A tax professional ensures you take advantage of every opportunity to reduce your tax burden, keeping more money in your pocket while staying compliant with regulations.

Still, the additional impact can’t be understated: expert tax management also reclaims business owners’ valuable time, enabling them to focus on growing their businesses and ensuring they can prioritize strategic initiatives.

How to choose the right CPA for your small business

Here are a few things to consider when selecting a CPA:

  • Seek industry-specific expertise: A CPA familiar with your industry can provide tailored advice that aligns with your needs and challenges. Industry knowledge ensures they understand the nuances of your financial situation and tax obligations.
  • Ask key questions: When considering tax preparation services, ask about their experience with small businesses, response times, familiarity with industry-specific regulations, and pricing structure. Also, inquire about their range of services, such as tax planning or audit support, to determine if they align with your needs.
  • Compare options: Evaluate CPA services against other tax preparers, considering expertise and cost. CPAs often provide added value through strategic financial planning, while other preparers may suit businesses with simpler needs. Comparing options ensures you find the right fit for your budget and goals.

Need tax prep help?

We hope this has given you a clearer understanding of the average cost of what small businesses can expect to pay for CPA tax preparation. Now, you can plan to ensure a smooth and stress-free tax season. Taking the time to organize and prepare now will save you stress and money later.

Archer Lewis specializes in making tax preparation straightforward and effective for small businesses. Our experienced CPAs provide personalized service, ensuring accurate filings and peace of mind while helping you focus on what matters most—growing your business.

Don’t wait until tax season becomes overwhelming. Let Archer Lewis handle the complexities of your taxes so you don’t have to. Ready to make tax season easier? Learn more about our tax preparation services for small businesses.