5 Must Ask Questions for Your Accountant

Have you gone through and crossed off everything in your bookkeeping checklist of must-haves? There’s honestly a lot to do before the year ends to tie up some loose ends and get ready for the next year.

As the year ends, you must sit in front of your accountant and ask the right questions because, at the end of the day, it’s your business. If you ask the right questions, you can educate yourself to prepare for the next year.

As a business owner, you wear a lot of different hats. When it comes to your finances, it’s a good idea to consult with an accounting expert to help, especially if you’ve just started your business.

Now that you have a bookkeeper, you can go to your accountant more prepared than ever, especially if you’ve weathered the COVID epidemic, faced so many uncertainties, and encountered challenges these past two years. Some of these things will carry over to 2021 so the more reason for you to ask questions to your accountant on your end.

1. How can I help you do a better job for me?

   No matter how good your bookkeeper and accountant are, they are only as good as the information you provide for them.

   The phrase “Garbage In, Garbage Out” means that rather than just deal with the day-to-day little pieces of paper, take it one step further and communicate how you can organize your finances every month with your bookkeeper to develop good financial habits so you spend less time looking for information and spend more time growing your business. You want to ask more overall questions and plan for the future with your accountant.

2. What is my tax situation?

   Taxes are never simple but day-to-day uncertainties and changes in tax laws due to COVID that have come up this year can make filing your taxes unusually complicated that’s carried over in 2020.

   Stay ahead of the unnecessary costs and stress by going over the following with your Accountant:

   • • •  Estimated Tax Payments

   Many companies are required to make estimated tax payments throughout the year. Due to COVID, some scaled back, and some received extensions.  

   Unfortunately, some are not expecting a profit this year as well while others used these funds to stay afloat.  

   Talk to your accountant on where you are at with this.  There is still time to not incur penalties if you make payments before year end.

   • • • Taxable Income

   Now is a great time to think about minimizing taxable income for next year. If you pay employee bonuses by Dec 31st, for example, you can claim it for this year’s tax return.  

   State tax payments are also deductible so long as they are paid before the end of December.

   • • • Section 179

   Be sure to ask your accountant about this especially if you are looking to get more equipment or a depreciable asset, they can advise you in the section 179 deduction based on your profit and loss status on the best time to buy.  

   • • • NOL (Net Operating Loss)

   New NOLs could provide you with more ways to keep your cash.  Ask your Accountant for more details.  The quick note on this is that traditionally, you can carry forward NOL benefiting your tax return for future years’ profits but complications start where you receive Coronavirus Aid Relief, and the Economic Security Act that changes these rules, so make sure you talk to your Accountant.

   • • • PPP Loan Consideration

   If you took out a PPP Loan, talk to your accountant for information to know what portion is forgiven and what you truly owe.

   • • • Business Closures

   If you are one of the many businesses who were affected by the virus and are in the process of closing down your business, make sure you finalize everything on December 31st.  You don’t want to spend 2022 dealing with tax penalties that can add up quickly for the remaining months you stayed opened.

3. Are there any industry or post-COVID tax regulations or benefits that I should know about?

   Some tax regulations affect only specific industries such as food tax in the restaurant industry, cigars and cigarettes for tobacco industries,  freight tax in the shipping industry.  

   Industry specific subsidies, regulations and specific deadlines and changes can significantly impact your business. Talk to an accountant with industry expertise to help you avoid paying taxes and penalties you don’t have to pay.

4. How can I better manage my cash flow?

   Cash flow management is a critical part of both your small business AND your personal budget so the sooner you learn this from your accountant the more ahead you will be this coming year.

   Ask your accountant to help you understand your cash flow, analyze problems and areas to improve and make plans to better manage it.  

   Your accountant can point out cash flow tendencies in your business that you might have missed or overlooked.

5. What changes could I make that would help my business from last year’s tax season?

Improving the bottom line is always an ongoing process and goal for every business owner.  Your accountant, who is the expert on tax laws and their yearly changes, can give you the insight you need.  Here are a few good questions:

• • • • What are the latest changes in tax law that affects my business directly?

• • • • How can I maximize my tax savings?

• • • • When is the best time to make big equipment purchases if you need to do it in your business for this year or the coming year?

• • • • How can I best keep track of my deductions with my bookkeeper?

Conclusion

Booking meetings a few times a year, especially year end, with your accountant is a good idea to be on top of your business’ finances. Make the most out of it by asking good questions that can help you plan and grow your business long term. 

Still don’t have a bookkeeper to maintain your business’ financial transactions? Nave Bookkeeping services small and medium-sized businesses in the USA virtually anywhere. Reach out to us at Nave Bookkeeping, LLC, or email us to get started.  We are currently accepting new customers.