A meeting with your CPA should not be a scramble to organize any incidental write-offs that have occurred throughout the year. It should be an opportunity to confirm progress towards existing goals and an opportunity to outline a strategy for future objectives. Of course, any meeting with your accountant is a great time to ask questions and exchange paperwork but far too many lack the organization, frequency and proactive action that is necessary to achieve the best results.
Tax season is not the best time of year to develop a strategy with your accountant. This requires planning in advance and consistent action, which is why it’s is a good idea for business owners to meet with their accountant at least on a quarterly basis. There are many business decisions that you make throughout the year that can have a significant impact on your taxes. For example, changing your business structure (LLC, c-corp, s-corp), hiring an employee vs. outsourcing to an independent contractor, business location, employee payment structure etc. This is not intended to be an all-inclusive list or to serve as professional advice. It is meant to highlight the fact that a large number of the decisions you make throughout the year will have an effect on your business taxes. Making these decisions without receiving proper professional council could leave you with a bundle of unexpected taxes. Planning ahead and communicating with your CPA on a regular basis will give you the best outcome.
When you do meet with your CPA bring all receipts and financial business records that your accountant does not already have. There are strict IRS rules that require that all tax deductions be accompanied with proper documentation. Your accountant should inform you of possible tax deductions that you might not be aware of, and what information is needed to properly record the deduction. Your accountant should not assume that you have discussed all of the possible legal tax deductions.
Common deductions that may be overlooked and your accountant should be asking you about are:
- Donations, including non-cash contributions.
- Business use of a personal vehicle.
- Home office
- Business trips
It’s all about the details. Most people know that under some circumstances these items can be used as legal deductions, but without all of the details that knowledge isn’t very useful. Is your accountant sharing the specific circumstances with you, and helping you choose the best way for you to provide accurate documentation? If not, ask them to at your next appointment.
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