Often people do not make a change in the way they do things until they experience a significant problem. Over the years, we have had clients turn to BAAP C.P.A. for many reasons. Many of these clients were working with other CPA firms in Clearwater, FL before they came to us.
Let’s look at 4 common issues businesses have with their CPA.
Many Clearwater CPA firms are reactive. They just handle the bookkeeping and file the tax forms. BAAP C.P.A is proactive. We give our clients financial advice on how to reduce their tax burden, improve their cash flow, and structure their businesses. We go beyond basic bookkeeping and tax services, and function like a partner and trusted advisor.
Many businesses only communicate with their CPA a couple of times a year during tax season. They don’t really know their CPA and feel like their CPA doesn’t really know them or their business either. The relationship – if you want to call it that – is purely transactional.
We at BAAP C.P.A. believe that for trust to thrive, there must be a relationship between client and CPA There must be good communication and regular conversations. The CPA firm should have a good understanding of where the business is financially, what it’s goals are, and what challenges it’s facing. This relationship and understanding are essential to be able to offer sound financial and business advice.
Obviously, you are not the only client your CPA has. However, there is an expectation that when you contact your CPA, if they aren’t available then, they should get back to you in a reasonable amount of time. When you do not get the answers that you need at the right time, it is frustrating and can cost you money. An opportunity may only come once, and when you miss it, it may be gone forever. We believe good, responsive communication is just as important as the accounting and tax services we provide.
If you get charged extra every time you communicate or ask for advice from your CPA, then it may be time to rethink your CPA firm. Nobody likes to get nickel-and-dimed for every little bit of advice or help provided.
All our advisory conversations with our clients are part of our client-CPA relationship dynamics. We want our clients to talk with us when they need information or advice for a business decision.
Many business owners experience these issues with their CPA and just put up with them figuring, “That’s just the way it is with CPAs.” No, it doesn’t have to be that way. If you are looking for a CPA firm in Clearwater, Largo, Dunedin, Oldsmar, , or Lutz that will get to know you and your business and offer sound, proactive financial advice, contact BAAP C.P.A for a free consultation.
Things are easier now for most individuals when it comes to filing their personal taxes. President Trump’s tax cuts raised the standard deduction, making the standard deduction a better option than itemizing deductions for most people.
Regardless of whether you itemize deductions or take the standard deduction, there are still some additional ways you can reduce the amount of taxes you pay. From our team of Clearwater and Lutz CPAs, here are our Top 3 Personal Tax Tips for 2019:
The tax code allows us to deduct sales taxes and property taxes as itemized deductions in the individual’s income tax return.
You get the bill for your property taxes in November, but in reality, you can pay it anytime. Therefore, you could pay your property taxes in January for year 1, and then in November when your tax bill for year 2 arrives, you can pay it immediately in the same calendar year.
By doing this, you can double your deduction for personal property tax in that year.
You can also do the same for your charitable giving. If you typically make large charitable donations at the end of the year, you could make those donations in January and then in December of the same year.
By “stacking” your deductions in the same year, you may push your itemized deductions above the standard deduction that year saving you thousands more than if you had taken the standard deduction.
Then the next year when don’t have any property taxes and fewer contributions to deduct, simply take the standard deduction.
Money put into a traditional retirement account is deductable. The maximum deduction depends on your age and income level. You may be able to contribute up to $6,000 from your income to fund your retirement account, and you do not pay the taxes on that amount this year.
You do pay taxes on retirement contributions and their earnings in a future year when you withdraw them. Most likely when you are retired and withdrawing money from your retirement account, your income and your tax bracket will be lower. Therefore, by contributing to a retirement account now, you are not only deferring taxes on retirement contributions but also likely to pay significantly less in taxes.
If you have a high deductible health insurance plan, you are allowed to set up a health savings account (HSA) to put your money into for current and future medical expenses. The contributions you make to your health savings account reduce your taxable income.
The old Flexible Savings Accounts (FSAs) had the drawback of being “use it or lose it” each year. But HSAs are more flexible in that any money left in your HSA account at the end of the year automatically roles into the next where it can be used to pay that year’s medical expenses.
If you are looking for a CPA in , Lutz, Clearwater, Largo, Dunedin, or Oldsmar to help you file and reduce your personal taxes, contact BAAP C.P.A for a free consultation.
Most Clearwater-area businesses seek the services of a Clearwater accounting firm to file their tax returns accurately and efficiently. BAAP C.P.A goes beyond this by providing business advisory services that improve the business’s cash flow and further reduce the business owner’s tax burden.
One example is a doctor who was referred to BAAP C.P.A.
The doctor’s practice was doing very well. Because it was doing so well, the doctor’s long-time accountant (not BAAP C.P.A.) had advised the doctor to take as large a salary as possible - $400,000 a year. The accountant reasoned that he was worth that much. After paying the doctor’s salary, the practice ended up with very little profit – less than $10,000.
For a business owner, salary is the least tax-efficient form of compensation. This is because not only is salary subject to federal income tax, but it is also subject to Medicare and Social Security taxes. The business pays 7.65% and the employee also pays 7.65%. Since a business owner is both business owner and employee, they are effectively paying 15.3% of their salary in Medicare and Social Security taxes.
On the other hand, a business owner is allowed to issue themselves a distribution of profits which is subject to federal income tax but not subject to Medicare and Social Security taxes.
Therefore, the doctor had the opportunity to reduce his tax burden by lowering his salary, increasing the profitability of the business, and then issuing himself a distribution of that profit.
Now, if you’re a business owner, don’t go off and cut your salary to zero and make your entire compensation a distribution.
The IRS requires business owners to take a “reasonable salary.” The IRS, however, does not define what a “reasonable salary” is.
This is where experience and expertise is important.
Pay yourself too high a salary, and you will end up paying more in taxes than is necessary. Pay yourself too low a salary, and you could be hearing from the IRS.
When the doctor came to BAAP C.P.A., we reviewed his books, and we advised him to reduce his salary to $250,000 a year. This enabled him to save $5,000 on his yearly taxes.
If you are looking for an accountant in Clearwater, Largo, Dunedin, Oldsmar, Lutz or , that will not just file your taxes but also reduce your tax bill, contact BAAP C.P.A. to schedule a free consultation.
