4 Things Your CPA Wishes You Knew

 

tax-468440_1280Your accountant is like your physician for your finances. He or she can only do so much with things that have already occurred, but when consulted about future events (i.e. “I’m thinking of running a marathon next year – is there anything I should be concerned about?”), they may have helpful advice that may save you (“You are a 2-pack-a-day smoker and your knees won’t handle a marathon in your current shape. If you quit smoking you’ll regain some lung capacity by then that will help you, and if you lose 20 pounds over the next 6 months, your knees can better handle the strain.”).

Here are four things that your Financial Physician wishes you knew:

We Can’t Answer A Phone That Doesn’t Ring. As we said above, accountants are your trusted financial advisors, and they can offer assistance throughout the year… but only if you consult them. Your accountant can be a key player in helping move your business into the place you want it to be. Whenever a life decision is in place, regardless of what you perceive the financial impact to be, (hiring, moving, large purchases or expenses, business status changes, etc.) contact your CPA.

You Have To Pay Taxes. There is no getting around this. If you are successful and making money, you have to pay taxes. The Hollywood image of the accountant “juggling the books” so that the business or individual pays no taxes is fictional and/or a felony (and for which the accountant could be indicted). A good accountant can use their knowledge of tax laws, codes and procedures to ensure that you pay less tax, but you still have to pay.

A Big Tax Refund Is Not A Good Thing. While everyone loves getting an unexpected windfall, keep in mind that a big tax refund is not additional income; it is money that you earned throughout the year but didn’t have access to. Put another way, it’s a no-interest loan that you gave to the IRS. That money could have been used inside your business for better things. For instance: instead of a $6000 refund, you could have had an additional $500 per month to hire an assistant, pay off debt, make business purchases, etc.

Cash Is King. For your accountant to be able to make the necessary moves to save you money, you must have the cash available to do so. An example: Contributing money to a retirement account is a great way to reduce your taxable income, but if you don’t have the money available to add to the account, it limits the options we have to help you reduce your taxes.

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