I don’t think a lot of micro-businesses in California need an accountant. If a business is just a few people, the owner/manager can use simple tools to do all business stuff, and hire a tax professional once a year.
We have been in business for 5 years in California, and we have a 4 full-time employees (including Anna and myself), and 3 regular part-timers (around the country). This stack of tools has evolved, and now I think it makes life pretty simple.
- We use ZenPayroll for payroll, to send all employees and contractors money. ZenPayroll then takes care of sending out tax statements to the people you pay, getting them to fill out an I-9, and your California EDD stuff. It’s the best payroll service for California companies, and it’s the same price as everyone else.
- For tracking time and invoicing, we use Harvest. It makes time-tracking easy, flexible, and cross-platform, and it makes invoicing easy and professional. I also admire the UI design.
- For bookkeeping, we use Outright (now GoDaddy Bookkeeping). This is lightweight – it will auto-import your transactions from banks like Wells Fargo or BoA, and help you to categorize them. This is all you need to do for book-keeping – if you run all of your payroll through ZenPayroll, and categorize all of your expenses (takes a few minutes a week) – congratulations, you’re a book keeper.
- At the end of the year, taxes are simple. You dump the raw data and reports from outright.com, and send that to a CPA. I have been able to have my corporate (C-Corp.) taxes done for for about $200, and the same accountant does my family’s taxes (also about $200). TurboTax is only marginally cheaper than a CPA, so I think most people who own a small business (LLC, S-Corp) should use a CPA, and go ahead and get them to do your personal taxes (they’ll use something like TurboTax by the way, but do a better job and give you random tax advice).
That’s it really. If you do all of your transactions through one corporate bank account, and all of your payroll through the payroll system, then you should mostly be a good citizen. This works for my little software business at least.
Also, business is about money, and by managing your books yourself early on, you’ll deeply understand your own cash flow and balance sheet, and be able to hire a competent accountant later on. I also think you’ll naturally make more money this way.