As I’m writing this, we have just passed the October extension filing deadline for individual returns. How did you do last year?
Did you have enough cash to cover your tax liability?
Did you run into any other surprises?
Because my focus for clients is cash flow management tax and retirement planning, sometimes I’m not the one completing my clients’ business tax return. They have an outside CPA to handle the tax compliance work. And that’s fine.
One thing I have always done with my clients when I wasn’t completing the return is arrange a year-end review meeting with the client and CPA to get us all on the same page before the end of the year (usually in the Fall if you’re a calendar year business).
If you wait until February when you drop off your paperwork to get your tax return done, it’s too late. Your opportunity for any kind of planning is gone.
This isn’t an all-inclusive list, but 3 areas I like to review with the outside CPA are:
- Cash Flow Planning
- Tax Planning
- Retirement Planning
Cash Flow Planning
- Has the business owner paid themself sufficiently all year? If not, how can we change that?
- Are you going to need additional capital equipment in your business by year end? (Equipment that is NEEDED, not just spending money to reduce your tax liability).
- Is any debt reduction planning strategy necessary for the new year?
Tax Planning
- Have I made sufficient estimated tax payments for the year?
- Does your current business structure continue to be the best choice?
- Are there any tax benefits the business qualifies for related to any recently passed tax legislation at the federal or state level?
Retirement Planning
- If the business owner doesn’t currently have a retirement plan in place, do they qualify to start one?
- What amount can be added to the plan for the benefit of the owner for this year?
- How can we maximize the owners’ contribution each year in the future?
If your CPA and bookkeeper are two different people, the relationship between them is important. Your bookkeeper has been recording transactions all year, and that’s fine to keep you compliant, but where the real benefit is, is in the tax planning that is done before year end with the CPA. Between them, they can help in making better financial decisions before year-end and help to reduce your tax liability.
I can help implement a cash flow management system that will show you what your numbers are telling you and design a plan to meet your personal and business goals. Click on the link here to find out more about Profit First!
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