4 Conversations to Have With Your Childcare CPA


April 1, 2024
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Here Are 4 Quarterly Conversations You Should Be Having with Your Childcare Accounting CPA 

Building a relationship with your childcare accounting CPA is key to helping your small business grow and thrive. At a minimum, you need to be checking in with your accountant on a quarterly basis if you want to give them a clear picture of the financial state of your business. The following are four vital conversations to have with your childcare accounting CPA on a quarterly, if not more regular, basis. 

Financial Statements

It is imperative that you touch base at least once a quarter with your childcare accounting CPA about your financial statements, including:

Profit and Loss Statement – Your P&L, or Income Statement, gives a snapshot of your income and expenses incurred over a specific period of time. You can compare your P&L statements from different accounting periods to assess changes and track financial performance over time. Your P&L will give you and your accountant insight into your business’s profitability.

Cash Flow Statement – Your statement of cash flows shows the cash moving in and out of your business over a given period of time. Cash flow is a critical component of the financial health of your business; it’s what you use to pay your employees, pay taxes, and cover everyday expenses. You and your CPA should be having regular discussions about your business cash flow and how to improve it. 

Balance Sheet – The balance sheet summarizes how much your company is worth, or its “book value.” The balance sheet balances your business’s assets with its liabilities and equity with the formula: total assets = total liabilities + total equity. Changes to the balance sheet should be discussed with your childcare accounting CPA on a quarterly basis.  

Taxes

Another important topic to cover with your small business accountant at least once a quarter is where you stand with taxes. 

First, you will want to make sure your quarterly estimated tax payments are on target, ensuring you don’t stifle your business cash flow throughout the year, while still avoiding an unexpected lump sum tax bill at the end of the tax year. Second, you will want to review any important changes to the tax law that may impact your business now or in the future. Finally, you should be sure to talk about any tax credits or deductions you may be able to take advantage of as your financial circumstances allow. 

Planned Changes to Business Operations and Significant Planned Expenses

A third conversation you want to be having with your childcare accounting CPA on a quarterly basis, or as needed, concerns any planned changes to your business operations, as well as significant upcoming expenses. Changes at the operations level would include overhead expenses, employees/staffing, changes to insurance coverage, and so on. Significant purchases would include real estate, vehicles, or business equipment and should be reviewed in detail for their tax implications and potential depreciation schedule. 

Growth and Long-Range Profitability   

Finally, quarterly touch-points with your childcare accounting CPA should include an assessment of where you are financially now and where you want to be next quarter, next year, and further down the road. Bring up your financial goals and be sure they are on target with your business’s long-range profitability. A knowledgeable childcare accounting CPA should be able to help you develop realistic financial goals and stay on track with them over the long haul. 

We hope these must-have conversations help you and your childcare accounting CPA stay on the same page as you build a strong financial foundation for your small business. 

The experts at Honest Buck are here to help you grow a more profitable Early Childhood Education business. 

Reach out to us today.


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