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Small business owners understand how complex and overwhelming managing their bookkeeping, business finances and taxes can be. In fact, many of them go it alone.
According to OnPay’s Small Business Finance and HR Report, only about 30% of small business owners work with an accountant and many that do tap their accountant’s expertise only do so during tax time or once or twice a year when they have questions.
That’s unfortunate because ultimately, an accountant isn’t just someone to help you stay in compliance with the IRS; they can also be a valuable business partner helping you make decisions and maximize your profits!
If you feel embarrassed or intimidated reaching out, here are five common questions that small business owners are afraid to ask their accountants. Hopefully, this list will encourage you to go ahead and take the plunge. It could make managing and growing your business easier than ever before!
Your accountant is there to assist you, so don’t be afraid to ask these questions and ensure you’re making the most informed decisions for your business.
Tax deductions and tax credits can be a great way to save money and reduce taxable income.
But with a Tax Code that’s over 1 million words—and changing all the time—there’s a good chance you’re not aware of all of the tax breaks available to you.
For example, are you taking advantage of business use of your personal vehicle, the home office deduction, and other tax write-offs? Are there any business expenses other small businesses in your industry deduct that you’re not claiming?
Ask your accountant about any other deductions or credits you might qualify for. They should be knowledgeable about local, state, and federal deductions that pertain to your specific business structure so you minimize your income taxes and keep more of your hard-earned revenues in your pocket.
The IRS recently announced it will be increasing audits of certain businesses. While the agency said it plans to focus on high-income earnings, partnerships and large corporations, many business owners are rightfully concerned about becoming the focus of an IRS audit.
Ask your accountant about your chances of being audited by the IRS or your state revenue department. Your accountant will have valuable insight into the likelihood of an audit. They can also review your past filings and alert you if any gray areas or red flags could lead to a visit from the IRS or other tax authorities.
Even if your chances of being audited are low, it’s always a good idea to be prepared. Audits can be stressful and time-consuming, but having proper documentation to support your tax returns can make the process smoother.
Ask your accountant about the types of financial records you should keep, such as bank statements, receipts, and other business records, and for how long. They should be able to provide advice on the best practices for record-keeping, including what documentation is necessary to substantiate income, expenses, and credits claimed on your returns.
In the unfortunate event that you do face an audit, your accountant can represent you in front of the IRS if they are a CPA or Enrolled Agent. Your accountant can help you understand the audit process, what information the IRS is looking for, and how to respond to their inquiries. Having a knowledgeable advocate in your corner can provide peace of mind during an audit.
Missing the deadline happens to the best of us, but addressing it as soon as possible is essential!
When you miss a tax filing deadline, the IRS can impose both a failure-to-file penalty and a failure-to-pay penalty and charge interest on your past-due taxes.
If you’re considering filing late because you can’t pay all the taxes you owe on time, you should still file your tax return. This will help you avoid the failure-to-file penalty. Your accountant can also help you set up an installment agreement to reduce penalties and avoid IRS collections.
If you’re worried about missing the deadline because you don’t have all of your tax forms, your accountant can help you file an extension and estimate the tax you owe. They can also help you plan to stay on top of your tax obligations moving forward.
The IRS has a pay-as-you-go system. This means they expect taxpayers to pay taxes as they earn money rather than in a lump sum when they file tax returns. For W-2 employees, these tax payments take the form of payroll tax withholding. However, you typically need to pay quarterly taxes if you’re self-employed.
If you’ve missed a few quarterly tax payments, don’t panic! It’s never too late to get back on track. An experienced accountant can review your tax situation and estimate how much you owe and how to pay off that debt affordably.
Many businesses have aggressive growth goals but lack the cash to make them a reality.
Ask an accountant for advice and insight to make better business decisions. They can help with budgeting and debt financing for any expansion plans.
They can also provide valuable insight into cash flow and how to maximize it. They’ll be able to offer suggestions on increasing profits while managing expenses and debt, as well as ways to make your business more efficient.
Asking the right questions is the first step in ensuring you leverage your accountant’s expertise to your fullest advantage.
But it’s essential to work with the right person. Not all accountants are created equal. If your accountant appears during tax season and is unavailable the rest of the year, they likely won’t be able to provide the business support you need or analyze problems that crop up outside of tax deadlines.
Being a trusted advisor is about more than just tax preparation. It’s about helping you see the big picture and make better long-term decisions, ultimately leading to greater opportunities down the line.
If you want to ensure your finances are in secure hands, contact NewWay Accounting. We can help get your books in order, file taxes, and provide advice tailored toward helping your small business grow!
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