Prepare for your tax-time meeting and get a head start on planning your strategy for the next year with these tax questions.
Talking to an accountant during tax time isn’t just a meeting that you need to get through so you can get on with the rest of your year. Your accountant can provide strategic advice, answer your tax questions, and educate you on the most relevant changes you should know about to help you make the best decisions for your business all year.
Treat this meeting as an opportunity to not just file your taxes, but to make sure you’re getting the support you need to continue growing in the years to come.
Not sure what tax questions to ask? These seven tax questions will help guide you through what’s most important.
1. What Information Do You Need from Me?
Because no one wants to drag out the process of filing taxes, being organized is the best first step to prepare for tax season. Ask your accountant what they need from you and get prepared as early as possible.
Organize your receipts, your financial statements and get up to date with your bookkeeping. This won’t necessarily lower your tax bill, but it will help to reduce the back-and-forth with your accountant.
You can also invite them to FreshBooks so they can generate the reports that they need themselves.
2. What Are the Rules for Some Common Business Deductions I Can Make?
As a business owner, you’re able to deduct some expenses. This is valuable because business deductions decrease your taxable income, which will reduce how much you have to pay in taxes. You won’t want to forget to take all of your allowable deductions! Your accountant knows your business and can advise which deductions you should be able to take.
Some common deductions you might have are:
Home Office Deduction
Is your home your principal place of business? If so, you may be able to take a deduction for the amount of space in your home that is occupied by your business. To qualify, you’ll need to have a separate space that is regularly used exclusively as an office.
Internet and Cell Phone
If you use the internet and a cell phone for your business, you can claim them as a business deduction. But keep in mind that if you use your internet and your cell phone for both business and personal use, you can only deduct a portion of your bill—the percentage that is allocated to your business use.
If your business has you on the road, you’ll be able to take a deduction for travel expenses that take you away from home. Your accountant can give you more advice on what’s allowed, but some things that are deductible are your transportation, lodging and meals.
Do you drive your car for your business often? You’ll likely be able to take a deduction for the business use of your car. The IRS allows you to choose the method that makes the most sense (standard mileage rate or actual expenses). Work with your accountant to pick the best approach.
3. Do I Qualify for the Qualified Business Income Deduction?
The Tax Cuts and Jobs Act (TCJA) brought about many new changes for business owners. One big change was the qualified business income deduction. The qualified business income (QBI) deduction allows some sole proprietors, S corporations, partnerships, and trusts and estates to deduct up to 20% of their qualified business income.
There are deduction limitations based on your income, but your accountant can provide more information on whether you qualify for the deduction and how much it will be.
4. What Are Some of the Other Changes from the TCJA I Should Know About?
The QBI wasn’t the only change that came from the TCJA. You’ll want to ask your accountant about other changes that affect your business. A few changes that may impact you include:
Meals and Entertainment Deduction
You can continue to deduct 50% of eligible meal expenses, but business are no longer able to take a deduction for entertainment expenses.
On items where bonus depreciation is allowed (think equipment and computer software), the bonus depreciation amount was increased from 50% to 100%. That means that if you buy a piece of equipment and place it into service, you can claim bonus depreciation for 100% of the cost that first year.
Net Operating Loss Carryforward
If your business experiences a loss, you’re no longer able to carry it backward. But you can now carry it forward indefinitely to help offset future income.
5. Is There Anything Else I Can Do to Reduce My Tax Bill?
This is probably one of the most popular tax questions. While your tax year is likely over by the time you meet with your accountant, you may still be able to reduce your tax bill. Talk to your accountant about what options are available to you. One of the most common ways to reduce your tax liability after the tax year is over is to contribute money to an individual retirement account (IRA).
Talk to your accountant to see if this is a strategy you can use and how much you can contribute to your retirement account. There are contribution limits based on your business income.
6. What Changes Should I Think about Making This Upcoming Year?
Working with an accountant isn’t just about filing taxes. A good accountant can help you strategically plan for a healthy business in the years to come. Ask your accountant if they offer advisory services to help you assess and grow your business.
You may specifically want to ask them about:
Cash Flow Analysis to Help Find Opportunity Areas
If you’ve ever nervously checked your bank account, you know that cash flow can be one of the most difficult aspects of running a small business. Your accountant can likely help you analyze your cash flow issues and suggest ways to make improvements so you don’t feel the crunch each month.
Create Financial Forecasts and a Business Budget
Do you know where your business is headed? Your accountant should be able to help you put together financial forecasts for the upcoming year. You may also want to ask them to help you create a budget so you can make informed decisions about where and how to spend your money, and invest in your business through the year.
Advice on Estimated Tax Payments
Are you sending enough money to the IRS each quarter for your taxes? Send them too much and you’re giving the government an interest-free loan for the year. Send them too little and you could run the risk of facing an underpayment penalty. Your accountant can look at your current income and your projected income to ensure that you’re sending the IRS the right amount each quarter this year.
7. Is This Still the Right Business Structure for Me?
Depending on how your business is growing, it may be a good idea to determine if the business structure you have is still the most advantageous for you. If you started as a sole proprietor, it might be time to talk about whether becoming a limited liability company (LLC) or an S-corporation would be a better choice.
Or perhaps you are an LLC, but for tax purposes, being taxed as an S-corporation might bring you substantial savings. If you’re planning to take on investors, it also might be time to look at incorporating. Talking through your business plans with your accountant can help you assess whether your current business structure is still the right choice.
Ask the Right Questions to Get the Most out of Your Accountant
Meeting with your accountant is an opportunity that you should take advantage of—not something to rush through or avoid. Beyond filing taxes, they can help you make sense of the tax rules and the numbers to help you grow your business.
Make use of this relationship to ask the most pertinent tax questions you have. It’s always helpful to have another adviser in your corner.
This post was updated in January 2020.
about the author
Erica Gellerman is a CPA, MBA, content marketing writer, and founder of The Worth Project. Her work has been featured on Forbes, Money, Business Insider, The Everygirl, and more. She currently lives in Hawaii.