Every year you probably say that you’re paying too much in taxes. You’re probably correct. Some of this may be because of your tax bracket, your business structure or some other factor, but it may also be because of the mistakes you’re making. Here are three, big, stupid mistakes I see small business owners make all the time with their taxes.
Mistake #1: You have the wrong accountant.
A lousy accountant is one that appears to be working for the IRS – always saying no, always shaking his head, always sighing and muttering “you can’t do that.” A good accountant is working for you by making suggestions, offering options and working the law to your advantage. You want an accountant that’s smart and motivated to help you save your taxes. He should be calling you during the year and not just sitting down with you for one meeting when it’s tax time. He should be proactively thinking of ways to help you reduce what is the biggest expense in your business. If that’s not a description of your accountant then it may be time to find a new one.
Mistake #2: You don’t plan.
A smart accountant is a valuable advisor. So meet with her at least two to three times a year and not just a week before the end of the year. Things change all the time and you’ll need to keep your accountant up to date on everything that’s going on in your business and your personal life. A good accountant will be looking at your quarterly data and making adjustments to your estimated taxes, offering suggestions to reduce your current year’s tax liability and even warning you of potential liabilities that you may not see coming. She’ll be current on the latest regulations and be thinking of ways to help you keep your tax payments to a minimum. You, on the other hand, should be giving her plenty of time to think about this because you’re meeting with her well before her busy season begins.
Mistake #3: You don’t pay attention.
When it comes to boring stuff, reading about taxes is up there with C-SPAN documentaries. But think about this, you scour the web to save 5% on a new laptop.
Why not spend some time trying save on your own income?
The smartest clients I know pay attention to their taxes and have found legitimate ways to reduce taxable income. They read and even attend a seminar or two once every other year. They do this so when they meet with their accountant they have questions to ask and aren’t operating in the dark. They understand that every dollar saved is another dollar that can be put toward a family vacation, a home project or a case of premium craft brew.
It’s OK to be stupid when watching Jeopardy or making your little nephew laugh. But don’t be stupid about your taxes. Get a great overview on the best ways to save money on your taxes with this article from Small Biz Ahead.
Join writer and small business owner Gene Marks each Wednesday on the Small Biz Ahead podcast. You can also submit a question for Gene to answer on the podcast.
View Comments (33)
Hi, I’m an Acupuncturist in the Boston area looking for a new accountant that fits this best version of an accountant.
Thanks!
The stupidest reason my taxes are too high is that the government spends money like a battleship's crew of drunken sailors.
We all pay too much taxes because of our Government's tax laws.
All you need to know is how great the real estate market is in and around Washington - it is unbelievable - just like our taxes.
There was a time when working for the Government was a low paying job with great security and reasonable retirement - now it is one of the best ways to get wealthy.
Legal corruption - trading stocks based on insider information - legal for Federal workers!
You shouldn't need to plot all year to reduce your taxes - we have lost the fight.
John
Great article. Very true good accountant is the key. I am looking for an experienced accountant and CPA in Raleigh NC. we have small business and I use my house as home office.
Please advise. Thanks!!
Three stupid reasons you pay to much:
1 You don't have a good accountant
2 You don't have a good accountant
3 You don't have a good accountant
Wow, I didn't know it was this easy.
Hi, I am in search of an account in the Boston area that specializes in acupuncturists, and healing center owners.
Thanks so much for suggestions!
Another addition to this - now that tax reform is reality it is CRITICAL that you meet with your accountant sooner rather than later. Do a proforma for your 2018 tax return with 2018 rates using 2017 numbers to see what the impact will be and if any adjustments need to be made earlier in the year. Maybe you should change your entity from a C corp to an S corp - or the other way? The tax bill is a big impact - it's worthy of your time to review with your CPA.
I love The Hartford Small Biz Ahead emails. This one was perfect as usual. Everything said in the article is true. I am working late tonight because my clients know the value of tax planning. We plan throughout the year. I have very few clients that I only talk to once a year. We send our clients to a bookkeeping service that shares our office and will do payroll even though most CPAs stay away from that work. Then for sure we are talking to our clients several times a year and they have more time to work on their business because we handle the taxes and payroll and they know they will not get any big surprises at tax time. And yes, my wealthy clients all read tax articles. Some go to tax update seminars. Clients need to understand that some of the best tax planning can be done when you have a bad year! Keep those Hartford emails coming.
All Business Owners (more so those who sell less than $5m) First buy and read Profit First by Mike Michalwikz (misspelled last name), then ask Mike for a referral....eye opening book about accounting and profitability!
First paragraph "he"
Second "she"
Third "they"
I appreciate that