Business Best Practices
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As a bookkeeper and a CPA, I get asked a lot of questions about taxes. While I’m happy to do basic research for my clients it's always a good idea to have a tax pro in your corner. Having a professional do your taxes and structure the legal side of your business will save you money at tax time and a bunch of legal headaches. But as with everything, how do you know if you’ve got the right tax accountant? Here are a few things to look for.
While tax season is an especially busy time, you need to find a tax accountant who will take the time to explain things and answer your questions. Sure taxes can be complicated, but if a tax accountant can’t explain it to you in layman's terms then they aren’t the one for you.
They either don’t understand it well enough to boil it down, or they glory in knowing more than you and want to keep it that way. Neither makes for a good working relationship. Look for someone who will take the time to explain to you what is going on and why.
Again, tax season is super busy, so don’t expect immediate answers, but you should expect to hear back from your tax accountant within a few days. Don’t spend tax season chasing down your accountant, or hoping they’re working on your stuff.
A good one will keep you updated on the process and answer any questions you have within a reasonable time frame. If they’re unresponsive, or unwilling to answer your questions (see point #1) then it’s time to find someone new!
I am all for reducing your tax bill as much as legally possible, so you should be taking advantage of every deduction available to you. But be wary of any tax accountant who wants to stretch the truth to get you a deduction. It's just not worth the risk.
Make sure your deductions are reasonable and can be backed up, or risk a painful IRS audit that could include a bunch of penalties and fees. Honesty and integrity are paramount when you’re dealing with money and sensitive tax information, choose wisely.
(NOTE: to maximize your deductions you’ve got to be keeping up with your bookkeeping. Download the Ultimate Checklist to Keep Your Bookkeeping Simple now and finally get caught up)
There’s more than one way to skin a cat and there’s more than one way to structure a business. You need to make sure that your tax accountant is making the best decision for you and your business. Not the one that will make them the most money.
Does choosing that specific legal structure really save you the most money or protect you appropriately? Or does it just guarantee that they get to file multiple tax returns each year and charge you for each one?
Obviously, they’re the expert in this area so it may be hard to judge if they’re making the best decision. But it all comes back to whether they have the heart of a teacher. Can they simply explain why they’re doing things a certain way? Get in there and ask questions, a good accountant will be happy to explain.
Go with your gut, get to know your tax accountant on a personal level, and trust yourself to make the best decision possible.
Where did you find your tax accountant and what do you love about them? I’d love to know.
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