An accountant can help ensure money is being spent wisely by monitoring the expenses and by providing detailed insights into a company’s financial condition, thereby helping with important financial decision-making.
Employing a qualified Accountants will benefit your company in several ways by offloading the burden from your shoulders. However, that doesn’t mean you shouldn’t keep an eye on how things are being managed in your company. Though you may not be doing your own taxes, as the business owner, you need not be aware of all financial operations.
You should work hand in hand with your accountant to not only ensure that you’re receiving your money’s worth but also to see to it that the financial decisions being taken are in favour of your business irrespective of whether you’ve worked together for a long time or you’re planning to employ a new accountant.
Here is a list of Top 10 questions to ask your Accountant
- What type of records should i be maintaining?
- Which structure will suit my business?
- Which direct business expenses are eligible for deduction from my taxes?
- How should I be preparing for the tax season?
- Can I claim home office expenses on tax returns?
- How do I valuate my break-even point?
- The people working with me, how do I file taxes for hiring them?
- From where can I receive financing assistance?
- How can I grow my business?
- Are there any changes of circumstances that I should inform you about?
1. WHAT TYPE OF RECORDS SHOULD I BE MAINTAINING?
To do your taxes, your accountant will need information and details of financial records, which you will have to maintain throughout the year. Your accountant will also need these financial records if you want to apply for a loan to expand your business. A few of these records might include revenue sheets, employee wage details, tax remittances, records related to the buying and selling of assets and operating expenses. Therefore, it is always a good idea to ask your accountant beforehand what all documents and records he/she would be needing.
2. WHICH STRUCTURE WILL SUIT MY BUSINESS?
Usually, there are four standard business structures to consider: sole trading, partnerships, corporations and Limited Liability Companies. The tax laws and structure vary for each business structure and accordingly does your tax liability. In the case of sole trading, the business and the owner are not separated and are the same entity. therefore, if the business suffers a loss and can’t pay debts, the owner is held directly responsible. In a partnership, two or more people come together and pool their resources to set up a business, and if the business suffers, it is the responsibility of all partners involved to clear the debts incurred by the business. Corporations as entities are separate from the business owners, i.e. the owner will not have to lose his/her personal assets in case the business defaults on government payments. Limited Liability Companies combine aspects of corporations and partnerships. Similar to corporations, owners’ personal assets are not at risk, but the responsibility to clear the debts lies with them. Your accountant will let you know which legal structure suits your business venture, more details about the selected business structure and the correct documentation required to maintain.
3. WHICH DIRECT BUSINESS EXPENSES ARE ELIGIBLE FOR DEDUCTION FROM MY TAXES?
Many business owners don't know that any expense that is directly related to their business can be written-off. Expenses and investments made directly in the business, such as services, paid rent and equipment expenses, can be declared while filing taxes. As long as all legal formalities have been followed, most direct business expenses qualify as deductible. Your accountant will help you out with which expenses qualify for deductions. You can use this information to plan your purchases for more tax savings.
4. HOW SHOULD I BE PREPARING FOR THE TAX SEASON?
Your accountant may be doing your taxes during the tax season, but to make the tax filing process easier, you could take certain steps throughout the year for organising your records and keeping your financial data up-to-date. This will prove to be beneficial, especially for small businesses who usually hire accountants on a per-hour basis.
5. CAN I CLAIM HOME OFFICE EXPENSES ON TAX RETURNS?
If you work from home, this is a very important question. For people who work from their home, they can claim certain expenses as home expenses while filing taxes. Expenses like Broadband connection, mortgage, utilities and stationeries, etc can be claimed during tax filings.
6. HOW DO I VALUATE MY BREAK-EVEN POINT?
For every business, it is very important to valuate the break-even point, so that a profitable pricing structure can be created. Accountants help identify the break-even point after analysing and comparing hundreds of metrics to determine if the business is running a profit or a loss. Putting a value on your break-even point will help you estimate how much business you should be doing on a periodic basis to cover your costs.
7. THE PEOPLE WORKING WITH ME, HOW DO I FILE TAXES FOR HIRING THEM?
The people you employ could be working for you either as employees or independent contractors, and as a result if this, there are major differences in filing taxes for both of them. With employees, you will have the responsibility of withholding, paying and remitting payroll taxes. However, you do not need to the same for independent contractors. Differentiating between employees and independent contractors can be a task of its own, and misclassification can lead to incorrect tax filing, which will invite penalties from tax regulatory bodies.
8. FROM WHERE CAN I RECEIVE FINANCING ASSISTANCE?
You might need extra money for so many reasons, such as business expansion, business renovation, etc. Your accountant will help you discover other financing options. They will also help you make decision whether money should be taken from a bank, from an investor, or even a lender. Accountants will also assist you throughout the loan application process.
9. HOW CAN I GROW MY BUSINESS?
Accountants assess all financial aspects of your business to suggest changes and upgrades that will help your business grow. They can track your progress to highlight spending areas that are bringing your business down. They can also assist with projecting the cash flow, which will help you plan for future expenses.
10. ARE THERE ANY CHANGES OF CIRCUMSTANCES THAT I SHOULD INFORM YOU ABOUT?
Getting a divorce, making a retirement decision, or selling/buying property, every decision that you make has the potential of impacting your finances. Therefore, it is crucial to keep your accountant informed about the same, as it will give them ample time to plan for the consequences.