If you've recently opened a small business, you may be excited but exhausted -- and eagerly anticipating the point at which you'll have a steady enough profit to hire some employees and take a few days off every once in a while. So when you're scrambling just to keep your head above water in the early stages of a new business, you may find yourself putting tax issues on the back burner. However, doing so could be costly in terms of both time and money.
Missing important tax deadlines can result in the assessment of hefty penalties and fines, and waiting until the last minute and presenting your accountant with a shoebox of unorganized receipts can cause your tax preparation fees to skyrocket as this highly-paid professional combs through various transactions. Read on to learn more about the information and data you'll need to help your first accountant appointment go as quickly and smoothly as possible.
What should you bring to the first meeting with your accountant?
In order to accurately prepare and file your federal and state income tax returns, as well as help you with any profit and loss (P&L) statements or other financial reports that can help you see exactly where your revenue is going, your accountant will need some key documents. These include the following, at a minimum:
- A tabulation of your gross receipts for the prior calendar year;
- Documentation of your business expenses (from credit card receipts to invoice copies); and
- Any statements indicating the amount of interest received on your business checking or savings accounts.
If your business is a retail one, you'll also need the data to figure the cost of goods sold (COGS) -- including your beginning inventory balance, the amount spent on inventory throughout the year, any inventory sales, shrinkage of personal use, and your ending inventory balance. Most businesses will also be able to deduct certain expenses, like advertising, office rent, and even meals out under certain circumstances. Having documentation of these expenses is key in being able to legally deduct them.
What type of financial advice should you seek from your small business's accountant?
Although many associate accountants with tax preparation and little else, an accountant who has experience in small business finance and tax law can also help you tweak your business's structure to minimize your tax rate as much as possible, leaving you with additional funds to put back into your business or bring home as a part of your salary.
When meeting with your accountant, you'll want to seek advice about timing any new business purchases to allow you to fully deduct the cost of goods purchased. In some cases, you may need to speed up your timeline to get a certain purchase in before the end of the calendar year, while in other situations, putting off a necessary expense or upgrade until the next calendar year can save hundreds or even thousands of dollars in taxes.
For more information and advice, talk with an accountant about business tax preparation.