Does it feel like your CPA or accountant is withholding important tax saving information from you? Do you feel like your CPA should be making more tax deduction recommendations? In this blog we’ll highlight 5 possible reasons your CPA isn't sharing all the small business tax deductions you know are out there.
1. Lack of Awareness
CPAs are human, and like anyone else, they can make mistakes or overlook deductions. One possibility is that your CPA may not be fully aware of all the deductions available to you. Tax laws are complex and subject to change, and it's possible that your CPA might not be up-to-date on the latest deductions that could benefit your specific situation. Asking how a CPA stays current on tax law changes and tax strategies is important to include when interviewing a new CPA.
2. You Might be the Problem
Another reason your CPA may not be sharing all deductions could be due to incomplete or inaccurate information provided by you. CPAs rely on the information you provide to them to identify deductions. If you fail to provide certain details about your finances, expenses, or investments, your CPA may not be able to claim all the deductions you're entitled to. Small business owners should be meeting with their CPA at minimum twice a year to discuss business and personal financial goals while also providing the year-to-date income and expenses. With this information, your tax professional can provide tax projections and all available tax saving opportunities.
3. Risk Averse
CPAs are often cautious when it comes to tax returns to avoid triggering IRS audits or investigations. They may be hesitant to claim deductions that could be considered aggressive or that lack sufficient documentation. While this approach is intended to protect you from potential trouble with the IRS, it can also mean that some legitimate deductions are left unclaimed to minimize risk. The best way to claim all deductions is to make sure your bookkeeping is current, accurate, and available to your CPA.
4. Time and Billing Constraints
In some cases, CPAs may have limited time allocated to each client's tax return, especially during busy tax seasons. This time constraint could result in a superficial review of your financial documents, potentially leading to missed deductions. Additionally, if your CPA charges by the hour, they may prioritize tasks that directly contribute to completing your return rather than dedicating extra time to hunt for deductions.
Effective communication is essential in the CPA-client relationship. Miscommunication or a lack of alignment between your financial goals and your CPA's strategies can lead to misunderstandings. If you haven't clearly communicated your financial objectives or if you and your CPA haven't discussed the deductions that matter most to you, it's possible that they might not prioritize those deductions in their recommendations.
To make the most of all available tax deductions for small business owners, Dillon Business Advisors implements a Team of 3 accounting, tax, and advisory professionals in small businesses to reduce the tax burden and keep more money in the business's coffers.
At Dillon Business Advisors, we work with owners just like you. Let’s schedule a call to start planning for your future.