Let’s face it—taxes are intimidating. When thinking about tax time, sometimes doubts and fears rise to the surface. Business taxes, especially, involve a lot of moving parts, changing regulations, and minute details to consider.
Like most fears and anxieties, tax fears can best be addressed with trustworthy help and support. A true business advisor--someone who does more than just file your taxes--is the best possible resource when it comes to navigating what otherwise might be a rocky landscape. Someone who takes the time to understand your unique business can spot opportunities and potential pitfalls before they cause problems.
You’re great at what you do, and your customers rely on you for knowledge in your area of expertise. However, no one expects you, as a business owner, to be an expert in tax codes, accounting, and specific processes involved in business tax filing. On the other hand, that is your business advisor’s specific area of expertise, and you should be honest about your questions and concerns so they can help you.
Common mistakes such as overreporting income, not applying proper limitations to business expenses, forgetting carryovers, and not filing specific forms and schedules with your tax return might seem like catastrophic errors to you. The best way to avoid these mistakes? Ask for help along the way, and your tax professional can help you make sure everything is in order.
That said, if you’ve made one of these mistakes and need help correcting it, your advisors at Business Advisory and Accounting Partners can help you sort things out and put you on a better path for next year.
There’s nothing more terrifying to a business owner than an audit. Even if you have nothing to hide, it can feel extremely invasive and embarrassing to have all of your business’s financial records put under the microscope. If you’re worried about being audited or if you’ve recently been alerted about an audit, communicate with your business advisor. Chances are, they’ve helped others through these types of situations, and they have the experience to take the fear and shame out of auditing.
Your tax professional will be able to tell you exactly the auditors will need to see and help you get all of your files in order so that the audit goes smoothly. If you have one business advisor and tax accountant, they will be able to quickly provide all of the books, payroll records, and financial statements necessary to secure a favorable audit.
For a business owner or independent contractor, every penny counts. One of the biggest business tax mistakes is leaving money on the table or overpaying taxes. In fact, if you don’t plan properly, you might overpay as much as 15% on your annual taxes. Depending on your business size, that can be thousands of dollars that you’re leaving on the table! That money could be put to better use by buying new equipment, renovating your office space, offering bonuses to top employees, or otherwise reinvesting in your business.
A true business advisor will help ensure you claim all eligible deductions for your business, paying just your fair share of taxes, and keeping everything on track for business growth.
There are lots of business tax preparers out there. They will simply take the information you give them, get all of your return documents in order, and file them. These tax preparers see you once a year and frankly aren’t invested in you, your business, or your success. So, what does a business advisor do? A business advisor becomes an integral part of your business. Working as part of your finance team, your advisor will work with you year-round to make sure that everything is on track.
Together, you will develop a year-long plan that takes into account all of your business functions, accounting situations, and ongoing growth projections. They’ll help you set aside the right amount of money so that there are no surprises when tax season rolls around. You will feel confident with a full picture of what’s realistic, attainable, and compliant with the latest tax standards and regulations.
BAAP’s tax professionals have been doing this for years. They’re happy to share this experience and help you understand anything that is confusing or intimidating. That said, mind-reading isn’t one of their many skills. In order to get answers to your questions, no matter how minute or silly they may seem, you have to be honest and ask them.
You trust your business accountant or CPA with some highly important aspects of your business. Yet, you might only talk to them once a year--if ever. Did you meet with them to discuss tax season this year? Or did you just drop off your documents? Or did all of this simply take place through email? Maybe you only interacted with a customer service person, who passed along your information to your CPA themselves.
On the other hand, let’s say you had an actual meeting with your accountant this year. What did you take away from it? Did you learn anything new, or was it just a hand-off of another task on your to-do list?
In this article, we’ll encourage you to take a look at your current relationship with your tax accountant and discover how it could be more fruitful.
Many business owners seek out a CPA when it is time to file the previous year’s taxes. A CPA is an accountant who has passed the rigorous, 16-hour exam required to earn that designation. You might also work with an EA, who carries the highest credential awarded by the IRS.
Either way, a large part of this professional’s job is tax planning and preparation. As you can imagine, they get extremely busy around March and April each year. That is, in part, because many clients only talk to them during that critical time of year. However, they are capable of providing a wide range of financial advice, all year.
We believe, to lead your business to its fullest potential, the person handling your taxes should be a business advisor. Either a CPA or an EA, or a team of accounting professionals, can provide business advisory services. These services extend well beyond tax preparation to enable the success and future growth of your business.
Regardless of your industry or business size, financial planning sets you up for success. If your company is not large enough to warrant having a CFO on staff, you will need to seek that skill set elsewhere.
You and your business advisor should keep tax planning in mind all year. He or she should inform you about any opportunities to reduce taxes owed, along with what expenses to track all year, how to structure your payroll, and what to withhold or set aside in preparation for next year’s bill.
Even if your tax bill is already the lowest it can be, a smart business advisor may find ways to increase your value or your profits. Talk about any and all financial matters, like investments, succession planning, insurance, etc. In a productive business advisory relationship, you should feel able to ask for any clarification you need. You are an expert in your business, so don’t feel you have to be an expert in financial planning, too.
Thinking back to your last conversation with your tax accountant, ask yourself these questions.
As you think through your answers, you should gain a clearer picture of what you need from a business advisor. It is our aim to educate businesses in Clearwater and the surrounding community so that we all succeed. If it’s time to move on from your current CPA, give us a call today!
