Tax season is fast approaching, and you may be feeling the stress of filing or reeling from tax law surprises last year. As an entrepreneur, getting ahead of your taxes is essential not only to making this season smoother, but also in preparing you for the rest of 2020. The simple first step is booking a meeting with your certified public accountant (CPA).
As a business owner, you have an advantage over others in that you’re more likely to be in regular communication with your CPA. Regular communication provides opportunities to check in on progress, keep your finances in order and implement fresh tax strategies. While talking with your CPA is the first step, talking about the right things is key to accurately preparing you and your business for tax season.
If you aren’t sure which questions your CPA should be asking, take a look at the three areas CPAs and entrepreneurs should be discussing together.
StartupNation exclusive discounts and savings on Dell products and accessories: Learn more here
Communicating about these topics now will save you from scrambling as Tax Day approaches:
- What are your company’s strategic goals?
Though your CPA is a fellow professional, he or she won’t know how to incorporate your business strategy into your tax plan unless you tell him or her what that strategy is.
When planning for the year, keep in mind how your business goals will affect your financial goals. If growth is on the table for you, your CPA will want to know that so he or she can prepare your finances now for the likely expense of opening a brick and mortar store, building your team, or stocking up on inventory later.
Once your CPA knows your plans, he or she can guide you in accelerating or modifying them as recommended due to opportunities they see in the tax code.
- What’s your plan if a recession hits your company hard this year?
Planning matters regardless of the state of our economy, but especially when there’s the potential for a recession.
If your industry is one that could be heavily impacted by a recession, whether it relies on imports or focuses on “luxury” spending like new construction, having a clear plan that both you and your CPA are aware of can save time and stress should a recession occur.
Now is the time to secure credit opportunities, and to begin scanning your competitors and industry closely. If potential layoffs are in your future, make plans with HR now to soften the impact as much as possible.
If competitors are likely to have layoffs, consider planning ahead of time to secure capital so you can expand your team with quality candidates who are suddenly looking for their next career move.
- What about sales tax?
Your CPA should be aware of the 2018 Wayfair Supreme Court decision, which gives states more control over requiring out-of-state businesses to collect sales tax — regardless of whether or not they have a physical presence in the state.
That means changes for all types of sellers who have sales throughout the U.S., not just retailers. Almost every state with sales tax now has a statute in place to collect more sales tax. If your company has met certain thresholds this year in any of those states and is not collecting, you are already out of compliance and creating a liability. Working closely with your CPA can alleviate your risk and position your company to handle this major transition well.
Plan on a proactive conversation with your CPA, and plan for it as soon as possible. If you don’t have a CPA, the sooner you book a consultation, the better for you and your business.
Don’t leave filing to the last minute, or you may miss out on opportunities. The further ahead of tax season you can collaborate with your CPA, the better prepared you’ll be for a realistic, and even optimistic, year ahead.