Choosing an accountant is a big deal, so it's critical you know the top questions to ask your accountant. Contrary to popular belief, accountants are not one-size-fits-all. This means it's important to work with an accountant who has experience working with businesses similar to yours. And once you find a potential candidate, you can dive deeper into their capabilities with the following top questions to ask your accountant.
How Can You Help Me Be Ready For Tax Season?
One of the biggest reasons why business owners hire an accountant is to help deal with tax planning and preparation. Ask questions about qualifying tax credits, deductions, and new tax laws in order to take advantage of write-offs. You can also ask about any opportunities specific to your industry.
Any skilled accountant will have measures in place to help you engage in tax planning year-round. For example, your accountant may suggest you use certain software, so they can monitor transactions and records on a regular basis.
This tax planning strategy can streamline and simplify tax filing to ensure you optimize your return. Make sure to ask the accountant about the specific strategies they use for tax planning.
What Are Some Things I Should Consult With You On A Regular Basis?
A knowledgeable accountant should be able to keep you aware of any factors that can affect your overall bottom line. Disciplines they should be well versed in include GAAP (Generally Accepted Accounting Principles), retirement planning, corporate taxes, individual taxes, and financial planning.
When it comes to weighing out the pros and cons of financial decisions, consider keeping them in the loop as much as possible. Whether you are deciding to hire a full-time employee or resort to an independent contractor, considering renting or buying an office space, or thinking about purchasing a company car rather than leasing one, letting your accountant know can open the door to valuable input.
What Business Expenses Can I Deduct?
Based on your industry and business, you may be able to deduct certain business expenses on your return. However, before you start claiming deductions, it's important to know each deduction has a specific set of rules you must adhere to.
Ask your accountant which deductions your business is eligible to deduct. Then, the accountant can help you sort through which deductions will offer your business the most advantages and how to claim them. Common examples of deductions you may be eligible to claim include:
What Can I Do To Better Manage My Cash Flow?
Maintaining an healthy cash flow is crucial for any business to stay afloat. Your accountant can create a cash flow projection to help you manage future expenses, highlight potential weak points, breakdown trends to help you better understand cash flow trends. In general, there are three types of cash flows:
Operating Cash Flow is the cash created from your normal business functions. This cash flow is critical when growing and expanding.
Investing Cash Flow is the cash generated from different investing activities, such as purchasing physical assets, purchasing property, selling assets, and investing in securities.
Financing Cash Flow is the money that moves between owners, creditors, investors, and your company. This is the cash generated to finance company initiatives and may include equity, dividend payment, and debt.
Can You Help Me Determine My Break-Even Point?
Whether you're launching a new product or looking to expand, it's critical to know your break even point. In the most simple sense, the break-even point is when your total sales equals your total expenses. This critical point represents when you're making enough to cover your operating costs and eventually move into profitability.
The break-even point is vital for determining pricing for your services and products. At the same time, this key metric can help you manage costs and establish a budget. Your accountant can leverage your financial records to effectively calculate your break-even point. By understanding what it takes to break even, you'll be better positioned to turn a profit.
Should I Restructure My Business?
Your business structure determines how it is taxed every year, so knowing the pros and cons of every structure is important. Overall, there are five different structures to choose from:
Because each structure has a different set of rules and can vary from state to state, it’s important to talk to your accountant to get a detailed explanation on the pros and cons of each structure. If you are considering moving your business to another state, be sure to notify your accountant as well, so they can help you with the transition.
Contact John F. Dennehy CPA
Your accountant should act as an extended arm of your business. In addition to the standard services and solutions, an experienced accountant can add tremendous value and offer you unparalleled insight. And if your current accountant leaves much to be desired, the team at John F. Dennehy CPA can help.
Contact us today to learn more about how we can help you achieve your business goals.