If you’ve waited until tax time to talk to your accountant, you may have waited too long.
Keeping regular contact with your accountant throughout the year is one tip offered to small business owners by many in the industry. That’s according to Xero, an accounting software company catering to small businesses. The company released the results of an annual survey this week in which accountants were asked about their top recommendations for small business owners.
About one-third (32 percent) of the accountants interviewed said small business owners should meet regularly with their tax preparers.
Meeting regularly with your accountant can avoid costly errors. These regular meetings can be used to plan when to make important capital purchases. They can also be used to decide when to incur other expenditures to be sure you have adequate deductions.
About 44 percent of the accountants interviewed by Xero said that meeting monthly with your accountant is important. Just more than 20 percent said that weekly meetings are necessary.
In an interview with Small Business Trends, Xero Partner/CEO and Principal of New Vision CPA Group Jody Padar said that part of the blame for delaying meetings falls on accountants. The industry is set up around spending time once a year sifting through a small business’s paperwork. Instead, accountants should be staying on top of things all year round. And cloud accounting is making that more possible, Padar said:
“You can’t plan in April. If you’re only meeting with your accountant at tax time, you can’t plan.”
If your business uses cloud accounting software, you likely have a better idea of the real-time finances of your company. And your accountant does, too. That makes these meeting times more effective, Padar added:
“One of the benefits is that your accountant gets to know your business. The busy work is already done.”
The survey offers a few more tips for small business owners relevant to accounting and tax time. Chief among those tips is to avoid leaving money on the table, mostly through overlooked deductions. These deductions can include depreciation, out-of-pocket expenses, auto expenses, and office improvements.
Another tip is to avoid faulty deductions, since these are more likely to bring an audit of your return, according to the Xero survey.
Accountant Photo via Shutterstock
It’s absolutely correct that the onus of contact between accountant and client falls on the accountant to instigate. I had to change accountancy firms because of their poor advice, and then the new ones were no better and neither kept in regular contact. Small businesses are not interested in what their ‘tax preparers’ have to say as by this point it is far too late to do anything about what actually matters. And for small companies, what matters is not your tax bill, it is your current business performance. ‘Tax preparers’ do not add any value to their client’s business and are performing a statutory form-filling exercise, and for a small business, they do not prove their worth.
Changing accountants can be a time consuming and therefore very annoying experience. And as Simon said, there’s no guarantee you’ll be better off.
I’m currently testing a new service model with my firm: choose the services you want, including regular site visits and meetings. It’s optional whether you bring your tax work over or not. Do you think this model will work?
Thanks for your opinion on this issue, Simon.
Based on my conversation with Ms. Padar, a lot of accounting firms are keen on changing that reputation. If small businesses go to their accountants with real-time data, the time spent with them can be much more productive.
Many of the tax planning decisions need to be made before year end and if you’re talking in the first 3 months of the year you’re too late on most of them.
I must admit that while I am quite good at marketing, financials is not really my forte. This is the reason why I need an accountant who will deal with it. But yes, you’re right. Constant communication is a must when it comes to financials.
Aira, you should also demand that your accountant helps you understand the figures. Once you understand the figures, you can see ways to improve your business and make more $$$$$$.
Many accountants are much more than just “tax preparers”.
We can help you improve your bottom line by showing how to:
– set goals for your business
– achieve those goals
Many accountants are still waiting to be asked to prepare forecasts and other higher-end financial services for their business clients. There’s a lot of experience and expertise that goes un-tapped.
We’re trying a different approach: Make bugeting and forecasting part of our core offering.
Do you think it will work?