A Guide to Asking the Right Questions of Your Accountant or Tax Provider

One of the things I hear a lot is that people aren’t getting what they need from their accountant or tax provider.  Sometimes this is because the provider just does the bare minimum to get the job done and sometimes it can be because they don’t know how much detail or level of service you really want.  Whether you're a business owner or an individual taxpayer, understanding the right questions to ask can make a significant difference in making sure your money is being properly accounted for by your accountant or tax provider.  Here is a helpful guide on some of the questions you should ask them.

What documents do you need and what is the BEST way for me to get these to you? Begin by asking your accountant about the specific documents and information they require and ask what you should be keeping to be in compliance with the IRS. This may include income statements, receipts, expense reports, and any changes in your financial situation.

What tax deductions am I eligible for or are there business expenses I may be overlooking?  Understanding available deductions for your financial situation can help you optimize your tax liability and maximize savings.

How can I improve my tax efficiency and profitability? Seek advice on strategies to enhance your tax efficiency. Your accountant can provide recommendations on choices that may result in tax benefits.  Usually, accountants have insights from looking at many different individual and business financial statements and may be able to tell you if your expenses are out of proportion to your income.

Are there any tax law changes that affect me or my business this year?  Tax laws are subject to change, and staying informed is crucial. Ask your accountant about any recent updates or changes in tax regulations that may impact your financial situation.

What retirement planning options are the best for my situation or what plans am I eligible for?  If you have a business, you may be able to make contributions to a Roth IRA, Solo 401k, SEP IRA or SIMPLE IRA.  If you work for someone else, you may be able to contribute to a 401k and a Roth IRA. Don’t forget if you have kids, they can contribute to a Roth IRA as soon as they have earned income!

Can you explain my tax return or financial statements in detail and in simple terms that I can understand? Take the time to review your tax return with your accountant. Ask for explanations on any unfamiliar terms or calculations to ensure a thorough understanding of your financial situation.  If you gave them information that they don’t discuss in this review, ask about it.  It may be that it isn’t applicable for the current year, but it also could have been accidentally overlooked.

Is my current business structure or filing status still optimal for my situation?  (When should I consider electing to be taxed as an S-Corporation instead of an LLC?)  Be sure to update your accountant with any changes to YOUR personal status too (kids moved out, you got married or divorced, lost a spouse, etc).

Effective communication is the key to a successful and productive relationship with your accountant or tax provider. By asking the right questions and maintaining open lines of communication, you empower yourself to make informed financial decisions, optimize your tax situation, and build a trusting and collaborative partnership. Remember, a well-informed client is better equipped to navigate the complexities of personal and business finance.  If you don’t get the answers you need from your provider, it might be time to look for someone new.