Don’t Leave Money on The Table
Does your CPA always wait until the last minute? Do they not get your returns filed until the due date and then you’re scrambling to review and make sure there are no errors? Is yours the business that has all of your work done in advance, but your CPA treats you like you’re unimportant and the reason you don’t file on time is because they didn’t have the staff, bandwidth, experience or professionalism to take care of it? This is how mistakes happen on your return.
When we see math and spelling errors on returns, we know that someone didn’t take pride in their work. Glaring errors = red flags, noticeable by a professional. If we can notice it, certainly a taxing authority will notice it. It may not even be an error in reporting, it may just be an error in bookkeeping that could have been recorded differently to benefit the organization, potentially leaving money on the table. An example of this is having salaries for shareholders set too high thereby reducing the potential QBI deduction and potentially paying too much in payroll taxes. If your returns are always completed at the last minute or on the fifteenth, this is a bad sign.
The level of quality offered by a firm is substandard if they are doing things late, not asking questions, not providing adequate time for review and not providing suggestions.
There are two types of business taxpayers that have not completed 2021 tax filings to date— people who have done their planning and are prepared but awaiting paperwork that is beyond their control and people who owe money and are disorganized and want to delay the inevitable.
There really isn’t a good reason for a business not having their tax returns prepared by July, if you had a calendar year end. The taxpayers with different fiscal year ends are an anomaly.
Plan for Growth and Change
Having accurate timely financial records and filed income tax returns is essential.
Business owners have so much responsibility, that they may not be aware that late prepared and filed tax returns can result in:
- Costly penalties and interest
- Inability to qualify for financing
- Prevention of a successful Merger, Sale or Acquisition (M&A transaction)
- Inability to provide timely information for managerial decision making
- Lack of confidence for partners and shareholders awaiting K-1s
- Financial wrongdoing to go undetected
- Missed tax credits
Just think, without proper returns you’re unprepared to open that additional location, hire those additional employees, plan for asset acquisition, begin offering new products or services, or work on long-time planning and exit strategies.