Chances are if you run a business, you’re an expert in that business. And if that business is not in the field of finance, you’re probably not a tax expert or a mathematics whiz. Once your business has grown beyond the point where you’re scribbling down the month’s receipts in a ledger, you’ll save money and time by hiring a professional accountant to advise you.
Look for an accountant with small business experience who is recommended by other business owners you trust. When you meet, try to get a sense of whether you think your work styles and personalities are a good fit. This should be an ongoing relationship, not one where you meet only when you’re dropping off your receipts at tax time. So choose someone you feel comfortable with, both on a personal level and in terms of qualifications.
Once you’ve selected an accountant, make full use of his or her services. Your accountant should be actively involved in your business operations, beginning with helping you set up an accounting system that will make it easy to transfer data for tax preparation.
There is a wide range of business activities that can either generate a tax bill or reduce your taxes, depending on the professional advice you receive. Stay in touch with your accountant, building the relationship so that when you have a question you can tap his or her expertise for a prompt answer. Some of the tasks an accountant can help you do include the following:
- Decide on ownership structure, or whether you should change from one structure to another
- Determine whether to hire employees or to use independent contractors
- Correctly estimate quarterly tax payments you or your business owe and help you revise estimates if your revenue changes during the year
- Advise on the best timing, from a tax standpoint, for major purchases, hiring, or even when to sell the business
- Make sure you are paying all state and local business taxes owed correctly and on time
- Help you with estate planning that will minimize the taxes you will pay
- Assist you in keeping personal and business deductions separate
- Handle the paperwork to make sure W-2 and 1099 tax forms are sent on time and that supporting documentation is on hand in case the Internal Revenue Service questions how you’ve categorized workers
- Properly depreciate any assets you buy, making sure you get the biggest deduction possible at the soonest opportunity
- Help you approach the IRS or other tax agencies if you can’t pay taxes on time and need to work out a payment agreement
- Provide support and work with tax investigators should you be audited
- Help you assess the tax benefits of setting up an employee health care or retirement plan
- Stay informed about changes in tax codes and laws
With an accountant as an ongoing member of your business team, you will get sound advice before making a move. This input may help you avoid thousands of dollars in taxes.
Business reporter Carol Tice contributes to several national and regional business publications.