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How Can I Help My CPA?

For a new business, what is the easiest (and possibly cheapest) way to manage my finances so that I'll have a neat little record to hand my CPA during tax season?

I'm glad that you asked this question, as I know some small businesses don't address this with their accountant. On a personal note, I run a company called BIDaWIZ that manages a marketplace of accountants and financial advisors, so I have first-hand knowledge of the consequences of not having a conversation with your accountant before, during and after the tax preparation process.

First of all, your accountant (CPA or EA) should have an understanding of the bookkeeping software that you use. Most have significant experience with Quickbooks and Peachtree, but you should certainly confirm that with them. If you're wondering what is the best and cheapest accounting software for you, it really depends on your company size, industry and budget. Outright, Xero and Wave's accounting tools all offer free versions or trials and are generally free for small businesses and freelancers. The larger names in the space as I mentioned before are Quickbooks, which has over half of the small business market, and Peachtree. My advice to you is to use an accounting solution that works well for you and provides for a seamless transition when you hand over your books to your accountant.

You should also provide your CPA with a company summary for the year. It's actually best to provide updates throughout the year as I discuss below. Specifically, your accountant will want to know about changes in headcount, management, capital investments, company healthcare plan and retirement plan as well as top and bottom line expansion or contraction, your plans for next year and changes in the industry.

Lastly, you should have an open line of communication with your accountant throughout the year. Even if this means spending a few extra dollars on the front end to have a quarterly or monthly call to discuss company updates with your accountant, do it. This will make tax filing much easier as there will be no surprises. Also, it will help you save on taxes as much of the savings is dictated by the actions you take during the year. More often than not, small businesses only speak to their accountant during tax time, when it's too late to benefit from certain business tax breaks.

I hope you find this high-level tax planning guide helpful. Please let us know if you have any other questions about how to plan to work with your accountant.

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