Individual Taxes
|
6 min. read

7 things to tell your CPA about before tax season

Don’t just talk to your CPA once a year. Talking to them at several points helps ensure you’re maximizing your tax savings after finances change.

Your financial situation is likely changing frequently as a business owner. If you only talk to your CPA once a year, then you could miss out on opportunities to find tax savings in the things that happen to you throughout the year.

For example, you might not think of your CPA as one of the people you should consult when you get married or invest in other businesses. But if you tell them those things as they happen, there’s a good chance they can help you use that information to benefit you and your business’ financial situation.

So, if you’re only talking to your CPA once every year, during tax season, then you might miss out on strategies to help you save. Find out what other things you should notify your CPA about during the year.

 

1. You started a business

If you start a business, your CPA should be one of the first people to know. The money you spend or make from your business has major tax implications to it – and there are specific ways you should be tracking and managing it.

Without the guidance of a CPA or other tax expert, you might make the mistake of mixing your personal and business finances together. There are also plenty of bookkeeping mistakes you can make that may hurt you during tax season.

It’s also important to tell your CPA that you started a business sooner than later so they can help you maximize your deductions.

2. You started a side hustle

Even if you didn’t start a full-fledged business, your CPA should know about any and all side hustles. Generally, your CPA should know about anything that makes you – or loses you – money.

Just like starting a business, your side hustle income means you may have a level of flexibility with your taxes. You may need to record and handle your income and expenses differently.

If you don’t tell your CPA about it during the year, you could also miss out on savings and deductions. They could also let you know if, and when, you should register as an LLC.

3. You got married, divorced or separated

Marriage, divorce or separation can affect your tax filing status. It can also affect how much you need to make to qualify for certain credits, like the child tax credit.

Your taxes get complicated – for better or worse – whenever your filing status changes, so your CPA should know about this when it happens and not just during tax season.

4. You made investments in other entities

Investments are important for your CPA to know about – but they don’t need to know about every single one. If you bought stock in Apple that’s worth 0.000001% of the company, it’s probably not a big deal to your CPA.

But if you invest or become a partner in another small business, that’s a bigger deal. If you become a large enough shareholder, that could impact when you file your income tax or quarterly tax returns. You may not receive a Schedule K-1, which is a form telling you how much you made from the business you invested in, until later in the year – which is something you should be planning for.

5. You had a child

Having a kid means you can qualify for the child tax credit. As a business owner, claiming all the tax credits that you qualify for can help you save a lot more on top of your business deductions.

The child tax credit is a significant one. You can earn up to $3,000 or $3,600 per child. So if you forget to tell your CPA about this, you could miss out on a major savings opportunity.

You should also tell your CPA if you adopt or foster a child. There’s an adoption tax credit that has a different value – which your CPA can walk you through.

6. You took out a personal or business loan

Loans of any kind can be a tricky thing to plan for – especially for business owners. How you structure that loan can have a huge impact on your business and taxes.

By telling a CPA about your loan during the year, they can help you decide whether that loan should be in your name, in the business’ name or something else.

If you talk to your CPA before you take out the loan, they can advise on what type of loan you should apply for – and whether you need one in the first place.

7. You got involved in real estate

There are several capacities for getting involved in real estate, including investing in, selling or buying.

Whatever the case is, your CPA should know since that could provide a lot of tax flexibility. Your tax and business situation will change depending on how exactly you get involved in real estate – and since it’s so complicated, your CPA can guide you through what you need to do throughout the year.

Since real estate deals and investments can be complex, make sure you’re working with a CPA who has experience with your type of involvement in real estate.

The bottom line

Working with a CPA can offer you a lot more value than just a completed tax return. A good CPA is one that helps you and guides you through your finances throughout the year.

You should get used to communicating with your CPA often if you’re a new business owner. That communication should include updates like whether you got married, had kids, bought real estate, took out a loan and more. Talking through those updates with your CPA can help you make the right tax and business moves now – and in the future.

If you’re looking for a tax expert you can easily communicate with, schedule a free call with a DiMercurio Advisors team member today. You shouldn’t have to make sense of your taxes and accounting alone – or expect guidance from them only once a year.

Schedule a call

Related Posts

How can I reduce my business debt?

Reviewed by Sheila Malavet | Written on Apr 07, 2020 | Last updated on Aug 30, 2021

Accounting

Do I have to forecast my business’ cash flow?

Reviewed by Sheila Malavet | Written on Apr 21, 2020 | Last updated on Apr 1, 2022

Accounting

How will getting divorced, separated, married or widowed affect my taxes?

Reviewed by Sean DiMercurio CPA CGMA | Written on Jan 05, 2020 | Last updated on Mar 3, 2022

Individual Taxes
Tax Tips

Do I need to collect sales tax or use tax in Florida?

Reviewed by Sheila Malavet | Written on Apr 01, 2022 | Last updated on Jul 18, 2022

Accounting
Tax Tips

Which states does my business need to register in?

Reviewed by Sheila Malavet | Written on Jun 11, 2022 | Last updated on Jun 13, 2022

Business Formation
Accounting Tips