5 Questions to Ask Your Accountant Right Now

By Gene Marks
The Hartford Small Biz Ahead | Originally published Published: November 9, 2020, Updated: August 28, 2023

It’s not news that this has been a crazy year. Many small businesses have been negatively impacted by the pandemic. And yet, there are a number of businesses that have continued to operate profitably, some that have even thrived. Millions of government loans were received. Some businesses took advantage of tax credits and payroll tax deferrals. Millions of people were sent home to work. Others labored on through the worst of the outbreak. On top of that, our tax returns were extended into the summer, and accountants have been scrambling to keep up.

Now we have to make sense of all this, particularly when it comes to our taxes. That’s because our tax expense generally represents one of the largest costs to our businesses and personal lives. This is why it’s critical that, if you run a small business, you meet with your accountant right now to discuss what you need to do to make sure you’re minimizing your tax liabilities for 2021.

What questions should you ask? To me, these five come to mind.

1. Are my estimated tax payments correct?

Your estimates this year were likely based on what you made last year. But throw that out the door. This year has been an unprecedented year. Maybe you made a lot less. Or maybe you had a better-than-expected year. It’s very possible that the taxes you’re paying in this year do not reflect reality. Which means you could be paying a lot less. Or even a lot more. In the end, you want to be paying exactly what you owe, so when your accountant does your return next year, there are no surprises. So revisit your estimated taxes based on your current situation and make revisions for the last quarter.

2. What’s the impact of the government stimulus on my taxes?

Did you take advantage of the Paycheck Protection Program? Good for you. If your loans get forgiven, you won’t be taxed on that. Your expenses used for the forgiveness of PPP loans are also deductible. PPP isn’t the only government stimulus program that will impact your tax situation. If you paid employees for time off under the Families First Coronavirus Relief Act, then you’re entitled to a tax credit after the year is over. Even if you didn’t participate in PPP, you might have taken advantage of the new Employee Retention Tax Credit. If you deferred payroll taxes, you will still owe them next year. All of these things will impact your tax liability and need to be addressed with your accountant.

3. Should I put more away for retirement?

If you’re like many, you’ve probably been spending a lot less on food and consumer goods during the lockdown. If you’ve been building up some savings, it’s a great opportunity to sock some away for the future. Talk to your accountant about making more contributions to your 401(k) or IRA. Then, pass on what you learn to your employees because you want to make sure they’re putting enough away for their retirement, too. You’ll thank yourself a decade from now. So will they…[MORE]

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To read the entire article by Gene Marks at The Hartford Small Biz Ahead website, visit: 5 Questions to Ask Your Accountant Right Now