How to Make Filing Your Income Taxes Easier For Your CPA
Filing Taxes
It’s tax season, and if you’re like most small business owners, you are probably beginning to feel overwhelmed just thinking about all the things you did in 2016 that you may or may not have recorded.
Despite how overwhelming it may feel there are tips which you can utilize to help alleviate the stress which often follows tax season. Here are some ways you can make filing easier for your CPA.
Compile and organize all your records
While it can be easier said than done, make sure you organize and compile all your records. If you are tech savvy, keeping a digital record of your expenses can make your accountant’s job easier. If you’re not so tech savvy, make sure you keep all your files in organized folders in order to ensure that they are easy for your CPA to navigate.
Report all of your income
If you learn how to report all of your income, you will never have to worry about how to protect hidden income. If for some reason you’re not completely sure if you should report it, report it. It’s better that you over report than under report.
Make sure your deductions are correct
Aside from forgetting about any additional income you may be bringing in, more filers do not include all of the deductions to which they are entitled. This could include office supplies, computers, hardware, business trips, out of home client meetings, and others. If you’re not sure if something qualifies for a deduction, don’t be afraid to ask.
Know the difference between tax deductions and tax credits
While tax deductions and tax credits are similar, they are not identical. Tax deductions lower your taxable income, and tax credits help subtract against your tax liability.
Knowing your filing status
Your filing status will determine the rate at which your income is taxed. Knowing your filing status before you file is important because your status affects everything else about your tax situation.
What other tips do you think have been important to keep in mind in order to help your CPA file your tax returns? Leave your comments below.
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How to Select a Capable Accountant
Choosing a Capable Accountant
Choosing an accountant can be as simple as posting a job on Craigslist and hoping the right person replies back. It can also be as simple as posting to Indeed and receiving hundreds of resumes for one open role. Choosing the right accountant, however, is usually a much more involved and daunting task. Here are just a few tips on how to choose the right accountant.
Choose a certified accountant
Hiring a certified accountant may not seem like a big deal at first, but it actually is. Ensuring that your accountant is certified nationwide to adequately help you and your business not only helps increase the level of trust that you have with your accountant but it also ensures that your accountant is not just taking you on as a “test run” client. Selecting a certified accountant shows that the person you’re working with takes their credibility seriously.
Seek accountants who have relevant experience
If you have a start-up company, you may not want to hire an accountant who works with non-profits. Make sure when hiring an accountant that you hire someone who has experience with your particular industry. An accountant with relevant experience will be better able to meet your needs.
Talk to your business associates
If you are a business owner who is often surrounded by other business owners, chances are high they too have had to hire an accountant; and while their accountant may not be able to work with your company, their accountant may know another great accountant who may be more suitable for you. One of the best ways to identify good candidates is through word-of-mouth.
Tap into social media
Social media is a powerful resource. It can be used to give people new jobs, fire people from their jobs, identify new resources and plenty of other things too. You need to be using social media to your advantage. If you’re looking to hire a new accountant, put out an ad on your social media pages. You never know who may come across your social media. There’s a chance the best possible candidate may be someone who is already connected to you in some way via your social media circle.
What tips do you have for choosing the right accountant? Leave your comments below.
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Five Ways Your Accountant Can Help You Budget Your Tax Refund
Budgeting Your Refund
Every business owner and individual looks forward to tax season, especially if tax season presents an opportunity for your business to get a tax refund. Because it usually falls outside of one’s ordinary budget, tax refund money is often spent on frivolous things without much premeditation. This is definitely a habit worth breaking, especially for business owners.
An accountant can definitely help you budget your refund so that you are put in the best possible financial situation. Here are four specific ways your accountant can help you do this.
An Accountant Can Show You How to Tuck Away Your Refund in Savings
While your accountant doesn’t have any official say over your money, they can offer friendly suggestions that may help you better budget your tax refund. One of the best ways your accountant can help you budget your tax refund is simply by encouraging you to tuck away your tax refund into your savings account.
An Accountant Can Effectively Help You Pay Down Credit Card Debt
Your credit card debt is a serious issue. A good accountant knows exactly what debt you have and how long you have to pay it off. When attempting to budget your tax refund, one of the greatest investments you can make is paying off any outstanding business debt you have. While many people may disagree with this advice, it’s important to remember that your tax refund is literally money you didn’t have in the bank so why not use that money to improve your debt problems.
An Accountant Can Teach You How to Build on or Start an Emergency Fund
Emergencies happen for all of us, and they happen even more frequently for business owners. Building or starting an emergency fund with your tax refund could literally save your business should it ever have to deal with a crisis. Being over-prepared is always better than being under-prepared.
An Accountant Can Help You Make Extra Business Payments
Do you have an office space? Equipment you are renting or renting to own? Get ahead of those payments while you still have a chance by making extra payments with your tax refund. Not only will it give you an additional cushion for the next couple of months to relax on, it will also give you a chance to experience freedom from paying bills.
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Why Hiring a CPA May Be Better than Using a Tax Software Program
CPA or Tax Software
It’s tax season, and if you’re trying to save every single dime in your pocket you are probably leaning toward the taking the cheapest route to filing taxes. One of the easiest and cheapest ways to file your taxes is by using a tax software program such as Turbo Tax. Though Turbo Tax can be a great way to file taxes, it’s important to note that there are numerous reasons why you should consider passing on Turbo Tax and instead hire a CPA.
Here are a few of these reasons:
- A CPA can represent you in an audit and Turbo Tax (or any other tax software) cannot
- A CPA can help you find ways to save money on your taxes
- A CPA can help you itemize even more deductions than any tax software program can
- A CPA can ask questions in order to get additional information about you and your tax history
- A CPA can help you correct any errors you make when filing your taxes
- A CPA can help you get an even bigger tax refund by asking you questions that Turbo Tax wouldn’t know how to ask
While these are not all the reasons why hiring a CPA is better than using tax software, it is a great start. What should be noted is that hiring a CPA brings a personal touch to your tax filing, and while working digitally may seem efficient, it’s not always effective, especially as it relates to your financial needs.
Ultimately, during tax season, whether or not you hire a CPA vs. using tax software is solely up to you and your business.
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Three Questions to Ask Before Hiring a CPA
Hiring a CPA
When hiring a CPA, it is important that you know exactly what you’re getting into before you allow a CPA to step in and begin to run your company’s finances. Oftentimes people make the mistake of simply hiring the first CPA they can come into contact with before taking the time to carefully determine whether that particular CPA is right for their business.
Before your company takes on the huge responsibility of hiring a CPA here are just a few questions you can ask along the way:
Do You Have Experience Working With Small Businesses In My Industry?
While this may seem like a no brainer, it’s important to always ask CPAs about the experiences they have with small businesses in your industry. Asking this question will not only give you insight on how well the CPA works but it will also show if they have enough expertise to handle you as a client.
What Types of Accounting Services Do You Offer?
One size doesn’t have to fit all when it comes to accounting services and in most cases it doesn’t. Being clear on what types of accounting services your CPA offers could save you not only time but money. If the CPA you are interviewing doesn’t offer the services you need, you may need to search for someone else to hire.
How Much Do You Charge?
Every CPA doesn’t charge the same amount and so you may want to check that you can actually afford the CPA you are thinking about hiring. Before you turn down a CPA because of a high price, ask your CPA how much they charge hourly, via a proposal or via a structured rate. You may not be able to hire them hourly but you may be able to afford one of their a la carte services if you ask.
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