Don’t Just Ask Your Accountant About Taxes!

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People often perceive tax time as an opportunity to save, by digging deep for deductions; However, approached correctly, tax time can also be a chance to grow. This tax season, take the opportunity to ask your accountant questions that go beyond the paperwork for this year’s filing. Here are eight questions to ask your accountant this season:

How Else Can You Help My Business?

Accountants aren’t usually business coaches or financial advisors; however, the good ones are whizzes at analyzing and understanding a mass of business data. They can suggest ways to better manage your cash flow, software programs that can improve your invoicing, and other tactics to make your business more profitable.

“The great accountants look at business as a circle where sales and marketing and finance and HR are all tied together,”Sageworks founder Brian Hamilton told Entrepreneur. “They can pull data on the operations of all of the various areas of the business together to provide more meaningful insight.”

Am I Using the Right Legal Structure?

Just as your business changes over the years, the business structure you need might change as well. Ask your accountant if, for example, it makes sense to shift from a sole proprietorship to an LLC or make other revisions to your business structure.

“Changing your business structure can separate your personal assets from those of your business, thereby protecting them if your business should be sued,” entrepreneur Nellie Akalp writes in All Business. “Also, you might find some tax advantages by switching to a different legal structure.”

What’s Effecting the Growth of My Business?

Growth is the life blood of any business. Your accountant can guide you on profitable growth in different ways. They include determining the true cost of employees when salaries, insurance, training and all other costs are factored in.

When Should I Make a Large Equipment Purchase?

If you run a construction business and your truck breaks down, you likely have to buy a new one immediately. However, many large equipment purchases can be more adroitly timed. Your accountant can help you evaluate the quality of your equipment, letting you determine if old equipment is holding you back. They can also help identify any tax breaks and cash-flow advantages from how you time your purchase. Your accountant can also suggest if you should get rid of a building, equipment or assets that are no longer paying off.

“Investing in capital purchases, like new equipment for a small business, often has positive tax benefits. But without the right timing and planning, equipment purchases don’t always mean cost savings,” explains accountant Joe Lauzen.

How Can I Take Care of the Health of My Employees?

Your accountant isn’t going to sell you a health policy or measure your workers blood pressure, of course. However, your accountant can be a valuable resource in determining the total cost of your labor force and how much you can spend on health care on a monthly basis. Additionally they can advise on how to negotiate the ins-and-outs of the regulations regarding health care.

Is There Anything I Should Do to Increase My Savings?

Your accountant can analyze your expenses, determine how to reduce bad debt, restructure financing, identify valuable customers and many other steps that can limit the amount going out while maximizing what’s coming in.

How Should I Prepare For Next Tax Season Now?

Many time-pressed entrepreneurs have trouble seeing past this month, let alone to next year. However, your accountant can advise on steps to minimize your taxable income throughout the year, so you maximize your return in 2018.

How Should I Start a Second Business?

Many entrepreneurs are serial sorts – when the bug of running their own business hits them, they want more. If you are going into start-up mode, your accountant can advise you on tax breaks, such as advertisements and travel to land new customers, that you can take even before you’ve opened your doors.

Tax time is a perfect time to ask your accountant questions about other topics. Take a few minutes to ask your accountant a few simple questions and you could improve your future, instead of just simply maximizing your return.

Tax Success for Small Business: A Tax Season Guide

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Ah, the sweet smell of tax season. Notes of despair, coupled with age-old panic, with a solid base of frustration and woe.

Guess what? Tax season for small businesses doesn’t need to be a woe-is-me event. Smart small businesses look at taxes as a year-round event, not just every spring and fall. That’s because those smart small businesses chose a tax advisor. They’ve built a relationship — which involves, without a doubt, some hefty legwork to begin — and that relationship serves their business month after month, year after year.

So how do you set your small business up for tax season success and choose the right tax advisor? We sat down with Kathryn Kaufman,CPA and Senior Associate at Chicago-based FGMK, LLC, a tax advisor who knows the nuances of taxes for small business well, and asked her advice. Here, she’ll help you get on your way with choosing an advisor; mistakes she sees small businesses making with tax preparation; and the benefits to building a long-term relationship with a tax professional who knows your business.

What are the key considerations for small business owners in choosing a tax advisor?

Kaufman: When a small business owner is considering a tax advisor, one of the most important aspects to consider is making sure the tax advisor has a good understanding of the business in which you are involved. There are so many kinds of tax credits out there and tax codes. So hiring an advisor that understands your industry can help you maximize tax benefits.

I would also advise the business owner to go with a tax advisor that focuses on small to middle-market businesses. When a larger company focuses the majority their business on larger clients, the smaller businesses tend to get lost.

As a tax advisor, how can your clients help you best at tax season?

Kaufman: I can’t tell you the number of times I have seen returns that need to be amended. Usually it’s due to information not given to the tax preparer. Whenever a business has a new agreement in place, they should send it over to their tax preparer right away. These can be structure changes, investor changes, etc. These are things we need to know about and capture on the return. Also, when you are not sure whether a document can impact your businesses tax return send it anyway. I always say, “I’d rather you give me too much than too little.”

What should owners consider when deciding to file on time or extend their returns?

Kaufman: One major reason small business owners tend to extend their returns are to give themselves extra time to fund their employer 401k matches/profit sharing contributions. Managing cash flows can be a deciding factor when it comes to funding those matches and timing of filing the returns. Also, I would always recommend extending a return rather than rushing it out. You run the risk of not capturing all the necessary items and having to then amend and refile the return.

When preparing returns themselves, what deductions and/or tax credits do you see missed most often?

Kaufman: There are so many credits out there and based on your industry, they vary. The most common mistakes I see small businesses owners make when trying to file returns on their own is electing incorrect year-ends, missing tax deductions/credits eligible to their industry, misclassification of income and expenses, and not filing in the correct states.

What are the benefits of building an ongoing relationship with a tax advisor?

Kaufman: You learn more about a client year-round than once a year. By building an on-going relationship with your tax advisor, you’re setting yourself up to prevent mistakes on your tax filings and maximize both your tax strategies and your business. When you have a tax advisor you trust, they’re your partner in every financial aspect of your business, including business decisions where you may not be able to see the tax ramifications.

A trusted relationship means you have a guide who knows your business and taxes to consult year-round, not just when IRS forms have to be filed. This prevents completely avoidable messes and surprises, two things I think every business owner would like less of in their lives.

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