CPAs will maintain all your tax information, much like a doctor would keep your medical records. They will act as a trusted adviser to ensure all employment-related taxes are filed correctly and that you take advantage of any available deductions. They can also help you plan for future expenses by identifying deductions and credits that can lower your taxable income. They can even help you decide when to purchase equipment or what investments may be more tax-efficient.
Identifying Tax Incentives & Strategies
CPAs can help businesses understand and use tax incentives, which are government-supported benefits that reduce taxes for individuals or companies in exchange for specific actions or investments. For example, taxpayers can deduct contributions to charity from their taxable income, encouraging them to give back to the community. In addition, a CPA can identify deductions that may be overlooked or underutilized, which can decrease tax liabilities. They can also help companies maintain accurate budgets and produce forecasts based on income projections, which can prevent surprises during tax time. Moreover, a Wichita CPA can recommend strategies for increasing spending before the year ends to decrease taxable profit or determine whether postponing income until next year is beneficial. This can include stocking up on necessary business supplies and negotiating discounts with vendors. Alternatively, they can help you identify bad debts that should be written off before the end of the current year. A CPA can also assist with property tax incentives and subsidized reductions in business taxes for investments or activity within defined geographic areas.
CPA services can include more than just tax preparation, depending on your needs. They can also be valuable financial consultants to your business, helping you develop and implement long-term investment strategies.
They can help you take full advantage of 401(k) contributions, health savings accounts, and other retirement options. They can also assist you in establishing and managing capital gains investments. Similarly, when it’s time to sell an asset, your CPA can help you understand the tax implications of the transaction so you can make informed decisions. CPAs are also qualified to communicate with the IRS on your behalf, ensuring that any requests for information or audits are addressed quickly and efficiently. Finally, a CPA can provide valuable insight and advice regarding budgeting and producing forecasts and projections based on actual income, not assumptions. This can decrease the risk of overpayment penalties and reduce the amount you owe in quarterly taxes.
In addition to providing tax preparation services, CPAs can offer strategic financial guidance year-round. This guidance can help clients make business decisions that decrease their tax liability. For example, suppose a client has an investment that will generate a capital gain when sold. In that case, a CPA can help them realize a loss from another investment to offset this gain and decrease their overall tax liability. This strategy is known as “bunching.” Other strategies include helping clients find deductions and credits they can use, ensuring they comply with payroll taxes, and anticipating any potential future tax obligations. Having this expertise can save a business from unexpected tax bills. A CPA can also help clients by examining their options around education savings accounts and retirement planning, such as IRAs and ROTH IRAs. They can also advise estate planning, minimizing future estate taxes for loved ones.
While many accountants offer quarterly estimated tax payments to help their clients avoid underpayment penalties and keep more of their own money in their businesses, it is essential to understand that this differs from proper tax planning. Tax planning goes much further and includes examining current and future financial goals while working with the client to identify tax savings opportunities that may be found. For example, a CPA may recommend changing how business expenses are tracked so that all the money can be claimed. This also encourages proper record keeping, making filing the annual tax return easier. Another area that can be helped with CPA services is education planning. For those with children who will be attending college, CPAs can help them set up a tax-advantaged account and grow the money to pay for their child’s education without taking out student loans. These are just a few ways a CPA can save clients money over time.