ASK your colleagues, friends, and family for recommendations. This is often the best place to start.  It’s a good idea to find an accountant that is familiar with your industry and financial background. Finding an accountant by referral of your social and professional network will eliminate the risk of choosing an unethical or “fly by night” accounting firm.

LOOK for a tax accounting team with tons of experience.  The more experience an accountant has in preparing tax returns, the more accustomed and likely they will be in preparing tax returns that have similar financial profiles as yours. Ask your accountant how many years they have experience working in the tax field.

FIND a Tax accounting team that has a degree from an accredited university. It is not a requirement for your tax preparer to hold a degree of accountancy to prepare tax returns for the public.  This will benefit you in the case that you may have questions regarding financial investments, real estate questions, or other tax related matters.  Many “run of the mill” accounting offices employ tax preparers that may only have 10 hours of training.

SEEK a tax accounting team that will give you an estimated cost of services. It is important to get an upfront estimated cost of services.  You don’t want to end up with “sticker shock” after the work has been completed and is price gauged.

SEARCH for a tax accounting team that stands by their work. Ask your accountant if they will be available all year around or just during tax season.  Many tax offices close May through December and will not take client phone calls.  A good accountant will be available for IRS tax appeals and resolutions.

ASK for referrals and read reviews.  A good accounting firm will have a list a mile long of clients that are happy and willing to provide words of recommendations.  Reading past client reviews and testimonials will give you a gauge of the quality of service.

CHECK and ask for their PTIN. Every tax accountant is required to have a Preparer Tax Identification Number.  This will help you weed out the unethical and “fly by night” tax firms.  Oftentimes an accountant will have their staff input data entry and they will do a quick cursor review. 

FIND a tax accounting team that will think outside the box.  Does your prospective accountant have industry knowledge and experience to ask you questions that you may have not thought of yourself?  A good tax accounting firm will have questionnaires available so you are ensured to receive every tax deduction and credit you are entitled to and will go “go up to bat” for you.

LOCATE a tax accounting team that will keep you up to date with tax legislation.  A good accountant will have at least 16+ hours of continuing education annually from an accredited IRS sponsored continuing education program.  If an accountant has the ability to keep  you up to date, they are most likely to be up to date with current tax legislation theirself.

Last but not least, A good accountant will offer tax savings advice, planning, and strategy.  Quality firms will offer tax-savings opportunities to clients when wrapping up their return for the year and offer mid-year tax strategy meetings.

10 Deductions for Small Businesses that you SHOULD be deducting (For Schedule C Profit & Loss)

The Internal Revenue Service states that a business deduction is valid if it is BOTH Ordinary and Necessary to carry out your business [1].  The IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year [2]

Professional Fees -  Expenses paid for accounting, bookkeeping, legal assistance, project consultant management are all deductible under this category.  As a business owner, it's good to have a strong network of these professionals and deduct these expenses on your Schedule C (Profit & Loss) Schedule

Advertising -  Small businesses need to market their businesses in order to grow and attract new clients, customers, and investors.  Some of the expenses that qualify:

• Public Relations

• Email Marketing

• Trade Shows

• Promotional Items

• Printed Material (business cards, newsletters, banners, signs)

Car and Truck - There are two ways that these expenses can be deducted.  There is the actual method (cost of gas, repair, maintenance, license plate tax, car depreciation, oil, etc) and mileage rate.  This is the most common deduction.  Mileage between job sites are deductible, however commuting expenses to the office are not deducted UNLESS you have made necessary steps to set up your home office as a satellite office for your business.

Home office - If you are lawfully conducting business in your home office, you are entitled to deduct a portion of your home expenses (utilities, property taxes, mortgage interest, hazard insurance, lawn/snow care, housekeeping, household supplies) to the allocated extent of square footage on your home.

Supplies - Do you use Pens in the course of business? Any expenditure that you incur while conducting business is most likely deductible.  Under this category, supplies can be uniforms, safety equipment, office supplies (pens, paper, ink cartridges, break room, snacks)

Insurance - Most Insurance is deductible (except auto insurance IF using mileage method) A few examples below:

• Workman's compensation

• General Business Liability

• Business Interruption

• Cyber Liability

Education - Investing in employee work-related education is essential to any business growth. As a result, The IRS allows business owners to deduct these costs. Examples can include seminars, conferences, tuition reimbursement programs, trade school, and continuing education credits. 

Retirement Plans-  This is a common missed deduction as most business owners are unable to provide these benefits early on in startups.  There are SEP, Solo 401(K), and group plan options available.  Make sure to take advantage of this one as a business owner can deduct up to 20% of employee contributions. 

Travel Expenses - If you’re traveling for business, tradeshows, seminars, etc, this is a deduction not to overlook. For a business expense to qualify as travel, it must be away from the city or area in which you conduct business. You must also be away from your tax home for longer than a full workday. Types of deductible travel expenses include airfare, tolls, taxis and lodging.

Employee Gifts - Employee gifts are 100% deductible up to $25 per year, per employee, according to IRS Publication 463.

While this is only a partial list of tax deductions, its best to talk with your tax advisor for professional advice.  Written by Steven Banach December 23, 2022.

___________________________________________________________________________________

References

1. IRS Publication 535 - 2021

2. IRS Notice - IR-2007-90