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December 11, 2009

Getting Help From Your CPA All Year Round

Getting Help From Your CPA All Year Round

Summary

If you’re like many small business owners, you’ll call your CPA when it’s time to pull out that folder of receipts and do your  ’09 taxes. T

If you’re like many small business owners, you’ll call your CPA when it’s time to pull out that folder of receipts and do your  ’09 taxes. That would be early April or perhaps in January if you want to plan ahead. Heads up: your CPA isn’t a jack-in-the-box who pops out only at tax time. You can save money on taxes and business expenses year round by checking in with your CPA before you make any financial decision.

1. Don’t forgo deductions. Your CPA can point out the deductions you should be taking, says CPA Belinda Fuchs, president of OwnYourMoney.com. To make deducting easier, your CPA likely will advise you to set up a separate business bank account, a move Fuchs admits she didn’t make soon enough herself when she founded her business. Blending personal and business spending makes it harder to tease out the business expenses at tax time. “Often, small business owners combine their personal and business finances and that really limits their ability to take the deductions they should be taking,” Fuchs says. “You track it through a separate credit card, a separate bank account. You write on the receipt, ‘I spoke with X and we talked about this.’ If you don’t, you’re potentially losing thousands of dollars in deductions.” 

2. Don’t over deduct either. On the flip side, you may be deducting too much. “You may be deducting all of your cell phone bill,” says CPA Jan O’Herron. “But it may be 80 percent business and 20 percent personal – and only 80 percent deductible.” 

3. Bring your bookkeeping early and often. Your CPA can help review your bookkeeping quarterly or even monthly to help you make the best financial decisions now and make tax time easier for 2010.  If you wait till tax time to reconstruct your records, it makes the task difficult. “If there’s a question and it happened February a year ago, you can’t answer the question now,” O’Herron says.

4. Which is better: repair, buy or lease? Whether you’re talking about a lawnmower, a Mercedes or a forklift, there are tax and business consequences to repairing, buying and leasing.  “I worked with a landscaper who needed to decide whether to buy a new lawnmower or repair the one he had,” Fuchs says. “We can help with those decisions.” A CPA also can assist you with timing a key purchase. “We can help you make decisions on whether to buy equipment now or next year,”  O’Herron says.

5. Business is their business. Tap your CPA for general business advice. “A CPA can assist you in preparing your annual budget,” O’Herron says. “A lot of companies run by the skin of their teeth for most months. I can sit down and talk to you about budgeting.

6. Get resources and referrals. Your CPA can refer you to other trusted professionals – a banker, an attorney, a graphics designer. Your CPA also can refer your business to others, Fuchs says.

Tax year 2009 is over, except for that year-end contribution to your IRA or SEP (right?!). But for tax year 2010, let your CPA out of the box and into your business life.