Financing a Small Business, Part 3 of 5: Tell Your Accountant Before You Spend the Money

calculator-178127_1280In February of 2014, I wrote a blog post titled “Financing a Small Business: 4 Items to Remember.” Over the next few weeks I’m going to expand on the 4 things from that post, plus a bonus 5th item that came to me later.


Today is Part 3: Tell Your Accountant About Major Expenditures Before You Spend the Money

This isn’t so much a matter of getting “permission” from your accountant, but rather, verifying the tax consequences and best structure for major transactions.

Example: I once worked with a small business client that had spent thousands of dollars constructing a building. The owner did not tell me about this project until after the building was finished and the year had ended.

He assumed all of the money he spent on the building would be deductible in full.


I had to be the bad guy and point out that most of the expenses had to be depreciated … over 39 years.

This was obviously a big blow to the owner’s tax return that year. He was not pleased. But if he had consulted with me ahead of time, he would have known the tax consequences and could have made a more-informed decision.

Remember, once the money is spent and/or the year has ended, there’s no magic your accountant can work to change the tax consequences of a transaction.