Many small businesses have a conversation with your accountant before, during and after the tax preparation process. This can be a costly mistake.
Does your accountant know your accounting software?
First of all, your accountant (CPA or EA) should have an understanding of the accounting software that you use. Most have significant experience with Quickbooks & Peachtree, but you should certainly confirm that with them. If you’re wondering what is the best and cheapest software for you, it really depends on your company size, industry & budget. Outright, Xero & Wave accounting all offer free versions or trials and are generally free for small businesses and freelancers. The larger names in the space as we mentioned before are Quickbooks, which has over half of the small business market, and then there’s Peachtree. Our advice to you is to use an accounting solution that works well for you and provides for a seamless transition when you hand over your books to your accountant.
Provide a financial summary of the year
You should also provide your CPA with a company summary of the year. It’s actually best to provide updates throughout the year as we discuss below. Specifically, your accountant will want to know changes in headcount, management changes, capital investments, top and bottom line expansion or contraction, healthcare plan changes, retirement plan changes, plans for next year, and changes in the industry.
Speak with your accountant throughout the year
Lastly, you should have an open line of communication with your accountant throughout the year. If this means spending a few extra dollars on the front-end to have a quarterly or monthly call to discuss company updates with your accountant, do so. This will make it much easier for tax filing as there will be no surprises. It also will help you save on taxes as much of the benefits are dictated by the actions you take during the year. More often than not, small businesses only speak to their accountant during tax time, when it’s too late to benefit from certain business tax breaks.
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