4 Things Your Tax Accountant Should Be Doing Now
To avoid last minute fire drills and a generally stressful first quarter, your accountant should now be laying the groundwork to submit your tax return next year.
What should you accountant be doing this early in the game? There are several things.
In this article, we’ll take a closer look at four tasks a good tax accountant should have in hand at this important point in the financial year.
1. Due Diligence and Status Checks
Whether your accountant has been working with you for years or it’s the first time you have used their services, they should reach out to you about now to check whether there have been any changes to your business since the last tax period. They need to understand your business operations in order to prepare your financials properly.
For example, if you have a change in ownership or a reorganization of your company, there may be filing requirements at either or both the Federal and State level. This may require the company to have a short accounting year for book and tax. Other consideration is where you are expanding the business- is the business adding locations in new States?
2. Notifying Clients About the Effects of the Tax Cuts and Jobs Act
In 2017, the tax rates changed and that could affect not only your tax rate, but also how you structure the company.
The Tax Cuts and Jobs Act came into play on December 22, 2017. The new act cut the rate of corporate tax from 35 percent to 21 percent commencing in 2018, the lowest it has been since 1939. The highest tax bracket for individuals was also reduced to 37 percent.
The new tax law provides a tax break for flow through business owners. Potentially (depending on your income bracket and other rules and conditions) you may be able to receive a 20% tax benefit.
The new law also increased the deductions of the cost of depreciable business assets from 50% to 100% in one year instead of them being gradually written off over several years.
Your accountant will have all the facts and be able to tell you which parts of the act affect your business, as well as if you should consider restructuring the business to minimize tax liabilities going forward. If he doesn’t, it’s time to get a new one!
3. Informing You About Estimated Tax Payments
If you’re a business owner and not making estimated tax payments already, it’s time to get your act together!
Here’s how tax estimates work:
- Estimates for individuals can be made based on 110% of prior year income tax liability.
- The IRS requires businesses to make estimated tax payments quarterly. Depending on the size of the business will determine how to calculate the estimated taxes.
- Your accountant will calculate your estimated tax payments on behalf of your business. As a general rule, you will be expected to make an estimated tax payment if your tax liability is $1,000 or more for the year.
4. South Dakota v. Wayfair – Does the Supreme Court Ruling Affect Your Business?
If you sell products online, listen up because the rules have changed.
A recent landmark Supreme Court ruling has dramatically changed the sales tax process and liability for online sellers. If you sell online products to customers in multiple tax jurisdictions, or you have a click-through nexus in multiple states, the new rules could apply to you.
Your accountant will be able to review your business model and tell you if and how your business is affected.
Tax season doesn’t have to be taxing. With all of the new legislation and any changes to your business, your tax process should really begin in the third quarter.
Managing tax preparation in addition to running your business can be a nightmare. By handing your tax responsibilities over to a qualified and experienced accountant, such as the team at Nomad (hint…hint) you can focus on running your business and rest assured that your tax process is in order. Good luck this season!