More than 85 million e-filed tax returns were prepared by tax professionals, according to the most recent data shared by the IRS. Many business owners seek help preparing their annual tax returns.
However, some business owners are still taking on the complex task of filing their taxes by themselves. Whether you are working solo or with a tax professional, the start of the year is the right time to get in touch with your accountant for help. Here are a few questions you can ask them to kick off the process.
Are there tax law changes that are relevant to my 2023 tax return?
There were a few changes the IRS announced that could be relevant to your 2023 tax return. The biggest of those changes are related to tax brackets and standard deductions, which will impact your personal filing (and business filing if you operate as a sole proprietor). In fact, most of what’s new for 2023 is related to individual tax returns.
There is one change worth asking your accountant about. In November, the IRS delayed a 2023 reporting change for business payments made via peer-to-peer apps like Venmo. “Referring to 2023 as a ‘transition year,’ the IRS said 2023 would have the old limit of more than 200 transactions worth an aggregate above $20,000,” reported CNBC.
Business income is still taxable — if you make or receive payments using Paypal or Venmo, ask your accountant for clarification on this rule to ensure you aren’t penalized for an honest mistake.
Talk to your accountant about specific options in the Tax Cuts and Jobs Act or the Inflation Reduction Act of 2022 to learn if there are other ways to reduce your tax bill.
What are the rules for some common business deductions I could take?
Everyone wants to lower their tax bill. Get ahead on the reporting process by finding out what deductions you can take and ensuring you have the documentation to back them up. Ask your accountant to see if you are eligible for deductions and credits such as the following:
- A home office deduction.
- Travel expenses.
- Internet and phone.
- Vehicle expenses.
- A qualified business income deduction.
- Meals and entertainment deductions.
- Bonus depreciation.
There may be other, less common business deductions that are relevant to your specific industry or state. Talk to your accountant about specific options in the Tax Cuts and Jobs Act or the Inflation Reduction Act of 2022 to learn if there are other ways to reduce your tax bill.
[Read more: Is Your Business Tax-Exempt? How to Find Out]
Can I do anything to improve my position?
While the tax year is over, there may still be ways to lower your tax bill. For instance, you may be able to donate to a charity, contribute to your individual retirement account, or put more money into a health savings account to lower your taxes. Consult with your accountant to find out if any of these options are still on the table.
Bonus: What is the best way to submit my forms and receipts?
Not interested in filing your return yourself? Ask an accountant or tax professional to do it for you. Keep in mind that tax season is extraordinarily busy. Make life easier (for them and you) by getting organized early.
Find out what system your accountant uses to collect your tax forms — do they use an online portal or prefer documentation in hard copy? Check to make sure you have the right login information and a secure connection for digital submissions. If they prefer hard copy, get folders and labels.
Likewise, start anticipating what information your accountant will need to streamline the process of preparing your return. For instance, your tax adviser or accountant will likely ask for the following:
- Your Social Security number or employer identification number (EIN).
- A copy of your most recent tax return.
- Income statements.
- W-2 and 1099 forms (if applicable).
- Proof of expenses.
- Quarterly filings (if applicable).
If your accountant has been working with you all year, they’ll already have most of this information. New advisers will need everything you’ve got to get up to speed — so provide these details well in advance of the April filing deadline.
[Read more: Navigating Tax Season]
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