We are now past the deadlines for the extensions on filing business and personal tax returns. This would be a good time to get an appointment on your tax preparer’s calendar to discuss tax-reduction strategies that you can still implement for this tax year.
One of the questions you should always ask your tax professional is, “How can I better organize the data you need and get it to you to enhance or speed up the process?” That opens you up to all sorts of suggestions, criticisms and comments, but it also gives you a chance to look inside how your business is operated, how your records are maintained, and how they are best transmitted to your tax preparer.
The next question to ask in that meeting is, “Based upon the returns you have just completed, what adjustments, if any, do I need to make to my business this year in order to lower my tax liability?” To effectively ask that question, you need to have an idea where you currently are this year in your business, specifically as to gross receipts and net revenue.
Now is also the time to discuss with your tax professional any assets you have recently acquired and will be holding for any length of time, as well as any pending transactions you are looking to complete before the end of the year.
An essential element of good tax planning is communication. Communication is a two-way street. Since you are the customer, you should take it upon yourself to initiate that communication with your tax professional. If that communication doesn’t flow the way you think it should, you need to look for someone else with whom you can communicate better.
Many of the topics I talk about in these posts can be exciting and interesting, but for many people, the idea of sitting down with your tax preparer is almost as painful as getting a root canal. The pain of paying too much in taxes, however, is far worse than sitting down for an hour or two with your tax professional to work out a comprehensive strategy that will allow you to keep more of your hard-earned money so you can wisely invest it, hopefully in a tax-free manner (Roth accounts), and use it to build long-term wealth.