5 Topics Every Business Owner Should Discuss with an Accountant
Come tax time, your CPA firm is probably on speed dial. But how often do you seek out your accountant’s advice on other areas of your business? Accountants are savvy financial advisors who can assist you with more than just filing tax returns. The start of the year is the perfect time for whole-business planning. Schedule time now with your accountant to discuss any activities over the next 12 months that could impact you financially.
Here are five key business issues that should be part of that dialogue.
1. Company growth: If you are planning any major changes to your business, it could affect your valuation—and your tax liability. Inform your accountant of any liabilities or changes in status including:
- Expanding into new locations;
- Adding or making changes in staffing;
- Merging with or acquiring companies;
- Positioning the business for acquisition or sale.
2. Financial planning. Budget is top of mind for most company executives going into a new year. But what about other financial issues that could impact your business? Now is a great time to do a portfolio review with your accountant to plan for your financial future. Topics to cover include:
- Strategic ways to improve cash flow;
- Getting up-to-date on retirement planning and wealth management;
- Any major investments, gifting or charitable giving planned;
- Capital investment, equity financing or bank loans in the works.
3. Risk Management. Close to 75% of small businesses don’t have a plan in place to protect their business from operational disruptions—either planned or unplanned.1 Broach the topic of continuity planning with your accountant and ask for input on ways you can mitigate risk in your business. Questions that you should be prepared to address include:
- Are insurance policies up to date?
- Are stringent compliance, security and privacy standards being met?
- Is the company protected against fraud?
- What internal controls are in place to protect the business?
4. Inventory: For businesses that deal in the sale or resale of goods, keeping on top of sales tax rules and regulations is critical—and challenging. Many states now have nexus rules related to where businesses warehouse inventory or fulfill orders. Work with your accountant to do a thorough assessment of your order process and cross-check that:
- Restocking and ordering processes are maximizing cash flow;
- Unsold inventory is properly accounted for on the balance sheet;
- Sales tax is being collected everywhere the company has nexus.
5. Tax compliance. State-imposed taxes can be just as onerous on your staff’s time as federal taxes. Are you confident that you have adequate processes in place to comply with regulations? Discuss any new tax laws with your accountant that could affect your business and how you can implement changes to address them. Seek counsel on:
- Collecting and file W2s and 1099s for any contract staff;
- Ensuring exemption and resale certifications are collected and stored properly;
- Update their taxability practices to comply with online sales and nexus rules;
- Conduct an internal review to look for any red flags that could trigger a sale tax audit.
Now is also a great time to reinforce a few best practices. Keep business and personal finances separate and to ensure all transactional records are complete, organized and easy to access. Automate any manual processes to save time and money and reduce risk. The sooner you get started on long-term financial planning and compliance, the sooner you will start seeing bottom line results.
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