For a lot of business owners, taxes only come up once a year: when it’s time to file. That step is called tax preparation. A good preparer can still claim the deductions you’re entitled to and make a few last-minute choices, but with the year already over, there’s not much left that can change your tax bill. Most of the decisions that shape it — like how you pay yourself or when you make a big purchase — needed to happen before yearend.
That’s where tax planning comes in. It happens throughout the year, so you don’t leave money on the table or get a surprise at tax time.
At Dillon Business Advisors (DBA), an outsourced accounting and advisory firm for small businesses, every client gets a Team of 3: three specialists who each own a different part of your accounting. One keeps your day-to-day books and payroll current, one handles your taxes and compliance, and one helps you plan for cash flow and growth.
The person who handles your taxes and compliance is your Client Controller. This post explains the difference between tax planning and tax preparation and what a Client Controller does all year.
Tax Planning vs. Tax Preparation: What’s the Difference?
Tax preparation looks back. Once the year is over, someone gathers your income and expense records and files an accurate return. It’s essential work, but by the time it happens, the year’s decisions have already been made.
Tax planning looks ahead. It happens during the year, while you can still act on what you learn, such as reviewing how you pay yourself or making sure you’ve set enough aside for what you’ll owe.
A lot of small businesses get the first and miss the second. Your return can be completely accurate and still cost you more than it needed to, simply because nobody looked at your options while there was time to use them.
What Is a Client Controller?
A Client Controller is the tax and compliance expert on your Team of 3. Their focus is the past: the numbers your business has already recorded. Your Controller uses those numbers in two ways. During the year, they use them to plan for taxes while there’s still time to act, and once the year ends, they use them to prepare your return.
Because your Controller follows your numbers all year, they’re the person to call when tax questions come up, like whether you can write off your vehicle or how to lower your taxable income before year end. Tax rules change often, and the right answer depends on your situation, so these are conversations to have with a qualified tax professional rather than decisions to make on your own.
Your Controller works alongside the other two members of your Team of 3: your Client Service Manager, who keeps your books current, and your Client CFO, who helps you plan for growth. The Controller sits in the middle, turning what’s recorded each month into an accurate tax return at year end and giving your CFO a reliable picture of where the business has been.
What Does a Client Controller Do During the Year?
Here’s what your Client Controller handles at DBA.
- Tax planning. Your Controller looks for tax savings throughout the year and builds a tax strategy around your business and personal goals, so you keep more of what you earn and don’t overpay.
- Tax projections twice a year. At the end of May and again at the end of October, you’ll review what you’re likely to owe and whether you’ve set enough aside.
- Your annual tax return. Because your Controller has followed your numbers all year, the return is backed by a full year of planning instead of being pieced together in March.
- Compliance and filing deadlines. Your Controller tracks the deadlines that apply to your business, so you aren’t the one keeping that calendar.
- Reviewing your accounting. Your Controller reviews the books your Client Service Manager keeps.
Why a Second Set of Eyes on Your Books Matters
When the same person keeps the books and checks them, mistakes are easy to miss. It’s the same reason it’s hard to proofread something you wrote yourself. On DBA’s Team of 3, your Controller reviews what your Client Service Manager records, using set processes and checklists. Errors get caught early, before they turn up during tax season or after a return is filed.
That review has another benefit. By the time tax season arrives, your Controller already knows your year in detail, so they aren’t seeing your numbers for the first time with a deadline approaching.
How Tax Projections Help You Avoid a Surprise Tax Bill
A surprise tax bill is hard on any business because there’s no time to plan for it. Tax projections give you an early look at where you’re likely to land, so the final number doesn’t catch you off guard.
At DBA, your Controller reviews projections with you twice a year, at the end of May and again at the end of October. You’ll see roughly what you’re likely to owe and whether you’ve set enough aside, with time left in the year to talk through options and act on them.
Next Steps: How to Tell If You’re Getting Tax Planning
You don’t need to switch providers to find out whether you’re getting tax planning or only tax preparation. Start with these questions:
- Find out when you’ll hear about your tax bill. If the first time you learn what you owe is when the return is finished, you’re missing the planning window that projections create.
- Ask who reviews your books before your return is prepared. A separate review step is one of the simplest protections against errors that carry into a tax return.
- Check whether tax planning happens during the year. Planning that starts after December 31 has far fewer options than planning that starts in the spring or fall.
- Notice whether your tax preparer knows your business. Someone who follows your numbers all year can spot opportunities that a once-a-year review would miss.
Get Help Planning Ahead for Taxes
DBA’s first step is a free business analysis. The team walks through your finances with you and shows what your Team of 3 would tackle first. Get your free business analysis to see what year-round tax planning could look like for your business.
