[Posted Jan. 23, 2008]

The Tax Man Cometh: Good Records Keeping Is Key

By Rosaland Tyler
Associate Editor
New Journal and Guide

     To track your money, consider hiring an accountant who will work with you year round rather than at tax time.
      This advice comes from three Hampton Roads accountants. Their tips are aimed not only at working folks but at business owners. Records show that an increasing number of African Americans are opening their own business in Virginia and nationwide.
     “Many people come to you at the end of a tax season with a shoe box,” said accountant Dwayne Coston, the director of Norfolk’s C & A Consulting Group, located on Granby Street. Coston, a Norfolk State University graduate, who has more than 22-years of accounting experience, added, “The shoe box, that’s their accounting system.”
      But, why? Census data shows that the number of minority -owned businesses increased by 26 percent from 1997 to 1992. Meanwhile, Blacks earned about 5 percent of the nearly $200 billion all Virginians earned in 2000, according to U. S. Census data.
      The bottom line is that things have changed. There’s a better system than a shoe box.
     “An accountant can work with you throughout the year rather than at the end of the year with your shoe box,” said public accountant Laurine James, who in 2002 purchased James Accounting & Tax Office, which is located in the Janaf Office building.
       Before buying the company in March 2002, James worked at the business as an accounting clerk for Oliver Johnson who founded the company in the 1960s. “He helped prepare me for it. He shared his experiences and I just grasped them,” she said, explaining how he mentored her, introducing her to influential clients, showing her the ropes.
       The biggest challenge an accountant faces is getting people to help them save, James said. “You don’t just spend, spend, spend. But you also save.” And you keep track.

     This is why your accounting system should not be a work in progress but computerized and up to date, added Coston, who had more than 22 years accounting experience before he opened his own business.
       Coston did accounting work for a health-care company, a construction company and the city of Norfolk for about 22 years after graduating from Norfolk State University in 1985.
      “Most mistakes are caused by lack of knowledge, especially when it comes to home-based business,” Coston said. “Where do you transact most of your business? Where do you have your office?” Talk to an accountant, then decide.
       That is one way to avoid the three most common mistakes, he said. First, obtain complete information about dependents. Two, know the deductions to which you are entitled. Three, invest in a simple but efficient record-keeping system.”
       There are online computer programs or extra software you can buy and install yourself. “But, you still need to keep paper records with a computer software system,” Coston said. “Document your business and personal mileage. Keep a mileage log. If you don’t—it’s like taking almost 50 cents and throwing it out the window after going a mile.
      Think of tax season all year long, James added. That’s often an accountant’s hardest job. “Getting clients to take advice which will help them in the long run is sometimes tough,” she said.
      But it’s never too late to learn new routines as a working person or a business owner. For example, start paying with a check rather than with cash. Then it’s easier to track spending at tax time.
      As a business owner, talk to your accountant before making a $10,000 (or more) single-item purchase, James added. “And seek expert advice. People often say ‘my friend said I can do this or that,’ but that often is not correct,” James said. It’s better to seek financial advice from an accountant rather than a friend.
      Moreover, consult an accountant before starting your business, she advised. “Many times people need an accountant before they need a lawyer.” Will you become a corporation or a LLC (limited liability corporation)? An accountant can help you decide.
       Then there’s this tip from Major Riddick Sr., an accountant and bookkeeper with more than 30 years experience. Invest your tax return.
      “I’ve had several people to receive tax refunds who didn’t need the money right away,” he said.     “So I suggested that they invest it. I try to get people to do an estate evaluation to determine their economic status. I urge them to use their tax refund wisely.”

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