Updated: May 12, 2020
Unless you happen to come from the world of accounting, I am 100% of the mindset that hiring an outside accountant is KEY for our industry.
So, I'm super lucky and my husband has been a CPA for about seven years. This meant I had sort of an inside-outside accountant on my business—but I gotta say, I was so thrown off with this world of accounting! Everything that I thought was super logical was not at all when it came to classifying things for write-offs and the rules around that....when you need to submit your taxes....how to submit sales tax...the list goes on! All of this was really complicated at first and it’s probably one of the harder parts about running a business.
The important think to note about this is that there can be some big consequences if you get this part wrong. I have heard horror stories of interior designers not setting aside the funds that they needed to submit for sales taxes and income taxes—either by the end of the month, at the end of the year, or the quarter—and being tens of thousands of dollars behind in taxes!
How do you even make that up?! This can put you in such a financial hole, so you want to make sure that you're getting this part of your business right! If you aren't married to an accountant or a CPA, and you're not one yourself, you really should be investing in an outside accountant. Hiring an account will save you money and make sure that your business is legal. It’s going to the one expense you are happy to pay every month!
Taxes can be confusing. They vary by city/state, and when you’re a solo interior designer you want to make sure that you're setting aside your income taxes. For me, that's almost 40% of my net profit—if I wasn't setting that aside, that adds up really quickly! Working with an accountant can also help you understand how much of that money you're bringing in for design fees/for profit on furniture is actually yours to reinvest in your business or pay yourself, and what needs to be set aside for taxes.
The Wrap Up
I cannot recommend enough that you should invest in hiring an accountant when it comes to this area, unless by some chance you are changing careers from being an accountant or CPA into interior design. Or if happen to be married to an accountant, like myself, you may want to consider hiring outside because if your spouse has their own career, it can take a lot of time! So, it may be worth it to work with somebody outside of the family so there’s no pressure or weird tensions when ensuring your account items get completed on time.
If you’re in the Grand Rapids area, I do have some suggestions for accountants that you can connect with, so feel free to send me a message if you want recommendations and I’ll be happy to connect you!
Me + my accountant/husband and my doggo