Outsourced Accounting

The Reed Corporation is a certified public accounting firm that keeps your books, runs your payroll, prepares your tax returns, and plans your taxes before the year closes, all handled by one team instead of a patchwork of separate vendors. When owners look for outsourced accounting, they usually want to know whether a single firm can cover the whole picture or whether they will end up hiring a bookkeeper, a payroll company, and a seasonal tax preparer who never talk to each other. We built the practice so that the people who record your transactions are the same people who file your return, which means the numbers behind your tax planning are the numbers we maintained all year, not a pile of receipts we see for the first time in March. That single fact quietly changes everything about how the year runs, because a business whose records are already reconciled has nothing to reconstruct when a deadline arrives.

Here is the plain breakdown of what the work covers. On the accounting side we keep monthly books, reconcile your bank and card accounts, run payroll with the federal deposits and filings that come with it, and produce financial statements a bank or an investor will accept. On the tax side we prepare individual returns on Form 1040, entity returns on Form 1120 for C corporations and Form 1120-S for S corporations, and partnership returns on Form 1065, and we do the year round planning that changes the bill rather than only reporting it after the fact. On the advisory side we help with entity choice, reasonable owner compensation, retirement plan design, and cash planning. The reason we fold outsourced accounting into the same relationship as tax is simple. A business that keeps clean books all year walks into filing season with nothing to rebuild, so the return is faster, cheaper, and far easier to defend if a question ever comes up. The alternative, where the bookkeeping and the tax work sit in different buildings, produces a return assembled from records nobody trusts.

A worked example shows the payoff. A ten person agency came to us running three separate providers. Their bookkeeper closed the month weeks late, their payroll service had quietly misclassified a long term contractor as an independent worker, and their tax preparer only appeared once a year. That misclassification created a federal payroll exposure of roughly 8,400 dollars once the unpaid employer share and penalties were added up. Because our outsourced accounting team runs the books, the payroll, and the tax work together, we caught the pattern on the very next worker, corrected the setup, filed the corrections, and built the estimated payments so the owner was never blindsided. One team, one ledger, and no finger pointing between vendors who each blamed the other. The prior arrangement had cost the owner not just the penalty but months of stress every spring, and that vanished the moment the pieces sat with one firm.

We see the same mistake every year. Owners assume a bookkeeper and a tax preparer coordinate on their own. They almost never do. The preparer receives a shoebox in spring and rebuilds a year that should have been clean from January, and by then real planning is impossible because every decision that could have lowered the bill is already locked in. Full outsourced accounting fixes that by keeping the records current month after month, so the tax plan rests on live numbers rather than a springtime reconstruction that guesses at what happened. The owner who waits until April to think about taxes has already given up most of the levers a CPA could have pulled, and no amount of skill at the keyboard recovers a decision that needed to happen in October.

The standards behind all of this come straight from the government. We keep the documentation the IRS expects, described in its guidance on recordkeeping, and we prepare returns against the wider rules for anyone operating a business. When you first form, the choice of entity drives years of tax outcomes, so we start with the IRS explanation of business structures and pick the form that fits how you actually earn. Those references are not decoration. They describe the exact documentation and the exact framework that keep a return standing up when someone asks a hard question about it, which is why we anchor the work to them rather than to habit.

State treatment varies, and we keep this overview federal on purpose. We serve owners in Austin, Chicago, Los Angeles, Miami, and New York City, and the state layer differs sharply among them, so the state specifics belong on the pages built for each city rather than here. What stays constant across all of them is the federal core that every business shares, from the way payroll deposits work to the way business income flows onto the return. If you want to see how the pieces connect, our bookkeeping service is the foundation the rest of the outsourced accounting relationship is built on, and it feeds directly into the tax work, while our tax strategy consulting service turns those monthly numbers into an actual plan. A business that keeps current books this year is a business that plans better next year, because the hard part is already done before the numbers are needed, and that head start compounds every year you keep it.

We work with small and midsize businesses, professional service firms, real estate owners, and higher earning individuals who need both ongoing accounting and real tax work from a single team. The sweet spot is the owner who has outgrown doing the books alone but is not yet large enough to justify a full time controller and a separate tax department on payroll. If you run a company with real moving parts, or your personal return has grown complicated enough that consumer software keeps missing things, you are the kind of client our outsourced accounting practice was designed around. The common denominator is not size for its own sake. It is complexity, the kind where several rules touch each other and the interaction is where the money hides.

Here is who we help most often. Service businesses such as agencies, consultancies, and design and legal shops. Real estate owners juggling depreciation schedules, the passive activity loss rules, and the occasional like kind exchange. Restaurant and retail operators with payroll, tips, and inventory. And individuals carrying K-1 income, equity compensation, rental property, or filing obligations in more than one state. The thread running through every one of them is complexity that a do it yourself app cannot read and that a once a year preparer will miss. These are situations where several rules interact, and the interaction is exactly what an automated tool was never built to see. A person with one W-2 and nothing else rarely needs us. A person with a business, a rental, and a brokerage account almost always does, because those three things create questions no software prompts them to ask.

A worked example makes the fit concrete. A real estate investor owned five rental units and self prepared for years. They were not claiming the depreciation the law allowed, they mishandled the passive loss limitation, and they let a chance to defer gain through a like kind exchange pass by on a sale that produced about 70,000 dollars of gain. Our team rebuilt three open years, claimed the depreciation left sitting on the table, and structured the next disposition properly. The depreciation alone recovered close to 15,000 dollars across the amended returns, and every year afterward ran cleaner because the hard structural work was done once and the savings then repeated. That compounding is the real argument for putting complexity in the hands of a firm rather than a spreadsheet. The investor had been losing money quietly every single year, not through carelessness, but because the depreciation and passive loss rules reward people who plan and quietly penalize people who guess.

We see this pattern constantly. Someone earns 380,000 dollars, runs a side venture, owns a rental, and still files with the same consumer software that worked fine when they made 55,000 dollars. The software has no idea about the qualified business income deduction and its phase out, or the net investment income tax that arrives at their level. Our outsourced accounting work catches the items software ignores, and the fee we charge is almost always smaller than the tax it saves. The cheap tool is the expensive choice once you count the deductions and elections it never mentions, because a program that costs a hundred dollars can quietly cost you ten thousand in a missed election it was never built to flag. The same gap shows up with equity compensation, where the timing of a sale, the difference between short and long term treatment, and the interaction with the alternative minimum tax can swing the bill by a wide margin, and none of that is something a filing app raises on its own. A client with restricted stock or options needs a person thinking about the whole picture across several years, not a form that only asks what the brokerage already reported.

We anchor everything to federal rules at each step. Business clients keep the documentation the IRS describes in its recordkeeping guidance, and self employed owners report on Schedule C with the self employment tax figured on Schedule SE. That self employment tax runs at 15.3 percent, the 12.4 percent Social Security piece up to the annual wage base plus the 2.9 percent Medicare piece with no cap, and a surprising number of new owners never budget for it until the first bill lands. For individuals, we plan around the federal figures that shift each year and confirm them against current IRS releases rather than trusting last year from memory, because a number that was right in one year is often wrong in the next.

One edge case deserves a flag. A client with foreign accounts or foreign income carries reporting duties that many preparers overlook, and the penalties for a missed filing are steep. We screen for those obligations at intake so nothing surprises you later. State rules also vary widely across the cities we serve, from Austin and Miami where there is no state personal income tax to New York City and Los Angeles where the state and local layers are heavy, so we tailor the state side to where you actually live and earn. Whether you are a business or an individual, our individual tax returns service is often the front door, and it connects straight to the planning in our tax strategy consulting service as your situation gets more involved. The client who starts with clean records is the client who never has to scramble later, and that calm is worth more than most owners expect until they have felt the opposite.

Bookkeeping and tax preparation are two halves of the same job, and keeping them under one roof is the whole reason our outsourced accounting model saves clients money. Bookkeeping records what already happened. It sorts every transaction, matches it against the bank and card feeds, and produces a general ledger that a return can be built from. Tax preparation then takes that ledger and turns it into filed returns. When the same team does both, the tax return is assembled from records we maintained and trust, so there is no gap between the books and the filing, and no springtime reconstruction of a year nobody kept track of. That continuity is not a small convenience. It is the difference between a return we can defend and a return we can only hope holds up.

The practical benefit shows up in how the year flows. When bookkeeping is a separate service handled by someone who never speaks to the preparer, the preparer inherits whatever arrives in spring and has to reconcile it under deadline pressure. Errors that sat unnoticed for months surface at the worst possible moment, and there is no time left to plan around them. When one firm owns both, a miscategorized expense gets caught during the monthly review rather than at filing, because the reporting step forces a second look at the numbers every period instead of once a year. The books and the return stay in agreement all the way through, which means the number you see in your October report is the number that lands on your April return, with no unpleasant gap between the two.

A worked example brings it to life. A consulting firm arrived with books that had never been reconciled to the bank. Owner draws were mixed in with business expenses, and about 22,000 dollars of transfers between the owner personal account and the business had been booked as deductible costs. Left alone, that would have overstated expenses and produced a return that could not survive a single question from an examiner. Our outsourced accounting team reconciled every account, separated the owner activity from the real business spending, and rebuilt a clean ledger. The corrected books actually raised taxable income slightly, but they turned a return that was a liability into one we could stand behind, and they surfaced a legitimate home office deduction the old records had buried, which recovered part of the difference the cleanup created.

The common mistake here is treating bookkeeping as a box to check and tax as the only thing that matters. Owners want to spend as little as possible on the books and then expect a flawless return to appear from them. It does not work that way. The return is only as good as the ledger under it. A deduction you cannot document is a deduction you can lose, which is exactly why the recordkeeping and the return are the same job rather than two errands. The monthly discipline of clean books is what lets us defend every number if the IRS ever asks, and that discipline cannot be manufactured in April from a box of receipts. It has to be built month by month, which is the entire reason the two functions belong together rather than apart. There is a second cost to messy books that owners rarely see coming, which is the price of a loan or a sale. When a bank underwrites a line of credit or a buyer runs due diligence, the first thing they ask for is clean financial statements, and a business that has been treating its books as an afterthought suddenly faces weeks of expensive cleanup at the worst possible moment. The firm that kept the ledger current all along hands over a package the lender can trust on the first pass.

The standards come from the government at both ends. We keep records to the IRS recordkeeping guidance, we substantiate the write offs with what the IRS lays out in Publication 535 on business expenses, and we apply the accounting period and method rules from Publication 538 so income and deductions land in the right year. Those three references describe what a clean set of books actually needs to support a return, and getting the timing right matters as much as getting the amount right, because a deduction claimed in the wrong year is a problem even when the amount is perfectly correct.

Because this is a federal overview, we keep the state layer light here, though it does matter. In the cities we serve the state treatment ranges from no state income tax in Austin and Miami to some of the heaviest combined burdens in New York City and Los Angeles, and each of those changes the planning that sits on top of the federal return. What does not change is that the books have to be clean before any of that planning is worth anything, because you cannot plan around numbers you do not trust. If you want the foundation done right, our bookkeeping service feeds straight into the return, and pairing it with tax strategy consulting is how the monthly numbers turn into an actual plan. A business whose books close on time is a business whose return writes itself, which is the entire point of running the two together and the reason our accounting clients rarely dread filing season. When the ledger has been right all year, the return becomes a review rather than a rescue, and the client signs it knowing every figure traces back to a reconciled account.

Tax preparation reports the year that already happened, tax planning changes the outcome before the year closes, and advisory helps you make the bigger structural decisions that shape every return going forward. A seasonal preparer does the first and stops there. Our outsourced accounting relationship does all three, because the real savings live in the planning and the structure, not in the typing that fills out the forms. Preparation is a look backward. Planning and advisory are a look forward, and the difference between them is often thousands of dollars that never show up on any invoice, because they are the taxes you did not have to pay.

Here is the distinction in concrete terms. Preparation is reactive by nature. It happens in spring, after every decision that could have lowered the bill is already made, and the preparer simply records what the numbers show. Planning is proactive. Because we watch your books month by month, when your income is running high in October we can accelerate a legitimate deduction, fund a retirement plan, adjust owner compensation, or time a purchase before December 31, while there is still room to move the result. Advisory sits above both. It is where we decide whether an S corporation election makes sense, how to set defensible owner pay, which retirement plan fits, and how to time a major sale. You cannot plan around numbers you only see once a year, which is why outsourced accounting and planning belong together rather than living in separate hands that never compare notes.

A worked example shows the money involved. An S corporation owner used a spring only preparer and took a 45,000 dollar salary against about 210,000 dollars of profit. That salary was too low to defend, an audit risk on its own, and the owner had no retirement plan sheltering any of the income. Our team reset the salary to a defensible 95,000 dollars, opened a solo 401k, and made the owner contribution for the year, which sheltered a meaningful slice of income at the owner marginal rate. The old preparer never raised either issue, because they never saw the business until the year was already over and nothing could be changed. The salary correction also lowered the exposure on the reasonable compensation question, so the fix protected the owner on two fronts at once, the tax saved today and the audit risk removed for tomorrow.

The common mistake is judging a preparer by the fee on the invoice. A business pays 750 dollars for a return, feels good about the low price, and never learns about the several thousand dollars of planning it left behind. The cheap return is the expensive one. The right comparison is not the fee alone but the total dollars out the door, fee plus tax, and on that measure the storefront preparer almost always costs more because of everything they never told you to do. Outsourced accounting costs more than a once a year filing and routinely saves multiples of the difference through planning that has to happen before the return, not on it. We have reviewed plenty of low fee returns that missed a retirement contribution, an entity election, or a credit worth many times what the return itself cost, which is the whole hidden price of shopping on fee alone. Advisory work also reaches beyond a single year in a way preparation never does. Deciding when to convert to an S corporation, how to structure the purchase of equipment so the deduction lands where it helps most, or how to sequence income and deductions across a high year and a low year are choices that ripple forward through several returns at once. A preparer working in spring cannot make any of them, because by then the year is closed and the choices are gone.

The planning leans on current federal figures, which is why using last year from memory is a costly habit. We confirm retirement contribution limits and deduction amounts against current IRS guidance, we compute self employment tax on Schedule SE, we manage the estimated payments through the estimated taxes rules so nothing triggers an underpayment penalty, and we hold every deduction to the standard in Publication 535. The 2026 estimated payment dates fall on April 15, June 15, September 15, and January 15 of the following year, and missing one of those quarters is one of the most common ways an otherwise solid plan picks up an avoidable penalty. Reasonable compensation, contribution limits, and the timing of a deduction all turn on current figures, and getting any of them wrong turns a smart plan into an exposure.

Because this page stays federal, note only that the state layer changes the math on top. Owners in New York City and Los Angeles face state and local taxes that make planning even more valuable, while owners in Austin and Miami plan mostly around the federal picture because there is no state personal income tax to work with, and we tailor that to each client rather than assuming one rule fits all. If you want the forward looking side of the relationship, our tax strategy consulting service is where planning and advisory live, and it draws directly on the monthly books from our bookkeeping service. The owner who plans in October pays less in April, and that ordering is the whole difference between a preparer and a real accounting partner, because one records the past and the other helps you shape the future while you still can.

Yes, payroll is a core part of the outsourced accounting relationship, and we handle clients who operate or hire across more than one state. When you make your first hire, a whole layer of federal obligation switches on, and getting it wrong is one of the fastest ways for a small business to attract a penalty. We run the payroll, calculate and deposit the federal employment taxes, file the required returns, and keep the whole thing coordinated with your books and your income tax so the numbers reconcile at year end instead of fighting each other. You should not have to become a payroll expert to run a company, and with us you do not, because the part of the job that trips owners up is exactly the part we do every day.

Here is what the federal side involves. Every employee needs a completed Form W-4 so withholding is figured correctly, and each January you issue a Form W-2 reporting wages and the taxes withheld. Through the year you deposit the withheld income tax along with the Social Security and Medicare shares, report them quarterly on Form 941, and cover federal unemployment separately. Miss a deposit deadline and the penalty stacks quickly, because the failure to deposit penalty grows in tiers the longer it goes unpaid. Our outsourced accounting team calendars every one of those dates and handles the deposits and filings, so the owner never has to track a federal payroll deadline personally, which removes one of the quietest and most expensive risks a growing business carries.

A worked example shows why the coordination matters. A growing shop hired four people and tried to run payroll through a cheap online tool with nobody watching the tax side. They set the deposit schedule wrong and fell behind on the federal employment tax deposits, and by the time it surfaced the failure to deposit penalties and interest had reached about 6,200 dollars. We took over the payroll, corrected the deposit schedule, brought the filings current, and set up a clean process so it could not happen again. Because payroll now sits inside the same relationship as the books and the return, the wage figures flow straight into the financial statements and the tax filing with nothing rekeyed and nothing lost. The owner had believed the cheap tool was saving money right up until the penalty erased several years of the supposed savings in a single quarter.

The common mistake we see is treating a worker as an independent contractor to skip payroll, when the facts say the worker is really an employee. That misclassification feels cheaper right up until it triggers back taxes, penalties, and interest for every quarter it ran. A contractor gets a Form 1099-NEC, while an employee belongs on payroll with a W-2, and the line between them turns on control and the working relationship, not on what is convenient. We test that classification honestly at intake and fix it before it becomes an exposure, because the correction after the fact always costs more than doing it right from the start, and once one worker is misclassified the same flawed logic has usually been applied to several. Owner compensation is its own trap on the payroll side. An S corporation owner has to run a reasonable salary through payroll before taking the rest as a distribution, and setting that salary too low to save on payroll tax is one of the most common ways a small business invites an audit. We help set a number that holds up, run it through payroll correctly, and document the reasoning behind it, so the owner gets the legitimate savings without the exposure that comes from pushing the figure past what the work is worth.

Multiple states add a layer, and this is where the federal overview meets reality. If you have employees in more than one state, each state has its own withholding and unemployment rules on top of the federal ones, and remote hires can create obligations in states where you never expected them. We serve owners in Austin, Chicago, Los Angeles, Miami, and New York City, and those states could not be more different. Austin and Miami have no state personal income tax at all, while New York City layers a city tax on top of a heavy state tax, and Los Angeles sits in a high tax state with its own rules. We keep the federal payroll uniform and tailor the state registrations and filings to wherever your people actually work, so a remote hire in a new state becomes a solved problem rather than a surprise notice a year later.

If you would like us to take payroll and the rest of the back office off your plate, this is the point to Request Private Consultation so we can scope your headcount and your state footprint before anything goes wrong. Our bookkeeping service and our tax strategy consulting service wrap around the payroll so the whole outsourced accounting function moves as one, with the wage data feeding the books and the books feeding the plan. The business that sets payroll up correctly on the first hire never has to unwind a penalty later, and that clean start is worth far more than the small cost of doing it properly from day one, which is the pattern that runs through everything we do. A payroll set up right from the first paycheck keeps quietly saving the owner money and worry for as long as the business runs, and that steady payoff is the real reason to get it correct early.