Article

Tax Season is Here!

Posted by Tony Berndt & Chuck Pavlik on Feb 08, 2017 22:00:00 PM

Topic: ALL

Businessman looking at reports on tablet

Keep your accounting accountable for smooth filing

If you’re a business owner, taxes are probably on your mind as you flip the calendar to 2017. The good news is tax season can be manageable – and even result in a positive outcome for your business – if you remember tax time is more than deadlines and documents. Following accountant-recommended tips can get your accounting in shape for tax filings and keep tax fees affordable. Tax season also presents a great opportunity to improve your overall accounting practices which in turn can result in improved cash flow throughout the year.

Provide thorough information from the start

Avoid giving last-minute information to your accountant. CPAs want to circumvent surprises that can add time and steps to your filing. Communicating early about the changes that took place during the year will be easier if you get your list ready now. Think big picture:

  • Real estate – Did you change a lease, or buy or sell a property? Did you remodel or expand any space? Changes to real estate holdings have property tax implications and other property-related expenses impact expense deductions.

  • Equipment – What new equipment, including software and computers and mobile device purchases did you make last year? Are you leasing any equipment?

  • Contracts and leases – In addition to equipment and/or vehicles you might be leasing, what services are under contract? This could include things like cleaning, janitorial, waste disposal, security, and landscaping.

  • Dues – Where were your memberships? This includes professional organizations or clubs used for meetings or for business-related entertainment.

These are just a sampling of possible costs you might have incurred to run your business. Your accountant knows the comprehensive list of business expenses that can be itemized as deductions, which in turn can significantly lower the amount of tax that you will owe.

Personal changes have impact, too

When it comes to changes, remember personal changes can impact the filing status of those family members sharing in ownership. Marriages, divorce and legal separations, births, adoptions, and deaths all influence taxes.

Gifts, bonuses, distribution of shares and stocks, along with any changes to succession planning should also be talked about with your CPA. In addition to impacting taxes and investments for retirement planning, significant transfers of wealth may impact ownership structure which has broader business implications.

Employee matters

What changes happened with your workforce last year? Did you work with a placement agency or utilize temporary employees? Did you make any changes to employee benefits offered to your employees? Did you or your employees receive special training or certification during the year? In addition to wages, many employee-related costs qualify as expenses necessary to run your business and may be taken as deductions.

Due Diligence

Gathering as many of the documents as you can before meeting with your accountant will get tax season off to an efficient start. For a complete list, talk with your accountant or visit the IRS website.

  • Receipts

  • Financial statements

  • Expense documentation

  • Contracts, leases

  • Inventory records

  • Bank statements

  • Investment records

  • W-2s

 

2017 crystal ball

Your accountant can’t predict the future but knowing what’s coming down the pike in 2017 will help direct your company toward a stronger financial position. This includes planning now for expenditures and investments so you can make the best use of deductions and cash flow. Developing a cash budget, including estimated tax payments for the next 16 months, helps your accountant plan for any changes or fluctuations in tax law.

Keep clear records of events throughout the year that will affect your accounting.

  • What major purchases are in the plans this year?

  • Are you considering refinancing or restructuring your debt?

  • What are you projecting for revenue?

  • Are you making any changes to your accounting methods or the way you prepare your financial statements?

Knowing your plans upfront, keeping your accountant informed, and keeping records will help you set the stage for smooth filing, and maximize cash flow to make the most of your business.

Keep your accountant in mind

As you begin this year’s tax season, look at your travel schedule from now and let your accountant know when you’ll be out of the office, or even out of the country. Deadlines vary for filing dates (S Corporations and partnerships are due March 15; C corporations and sole proprietors are due April 18). Making sure you’re available to answer your accountant’s questions, locate additional documentation or provide signatures, reduces the risk of missing deadlines and creating undue urgency.

When it comes to taxes, you and your accountant are after the same end goal. The more you communicate and the better organized you are, the better the chances for a smooth filing that will help you reap the most benefits for your business. Checking in regularly during tax season and throughout the year will help ensure the best tax scenario this year, and next year too.

 

 

About our blog contributors:

Tony Berndt works at Quandt Berndt & Company, LLC, a full-service accounting, tax, and consulting firm. With over 25 years of experience providing tax and accounting services to business owners in multiple industries, he specializes in family-owned business planning, and working with individuals to minimize their tax liabilities. He has extensive experience with consulting and strategy to help maximize value of privately held companies. Tony can be reached at 414-840-0209 or anthony.berndt@qbcompany.com.

Chuck Pavlik is a Shareholder at Vrakas CPAs + Advisors with over 20 years of experience in tax consulting and compliance for owners of closely-held businesses. He can be reached at 262-798-7635 or cpavlik@vrakascpas.com.