Knowing the right questions to ask your CPA can help you plan ahead and avoid a surprise tax bill.
When I started my first business, I assumed having a bookkeeper and a CPA meant the financial side was handled. My bookkeeper recorded what had already happened, my CPA prepared my taxes, and I paid what I was told I owed.
Thankfully, I had researched enough to know I needed to set aside a percentage of my income for taxes. But that was the extent of my planning.
It wasn’t until I started working with my business coach that I learned how involved I needed to be. I didn’t need to become an accountant, but I did need to understand my numbers well enough to make informed decisions and ask better questions.
I wish I had learned that much earlier.
Now, I pay that lesson forward. I meet so many business owners who are caught off guard by a huge tax bill, don’t have enough money set aside, or may be missing opportunities to reduce their tax liability.
Before year-end, meet with your CPA or tax professional. From my personal experience and with my clients, here are some questions to ask your CPA and bookkeeper so you can plan ahead and avoid costly surprises.
First, Make Sure Your Books Are Current
Your CPA can’t help you plan with numbers that are several months old or incomplete.
My recommendation is that someone should be working in your books at least twice a month. Depending on the number of transactions in your business, weekly may make more sense. Transactions need to be categorized, accounts reconciled, and questions cleared up while the information is still fresh.
You also need to look at your numbers weekly or at least twice a month. If you wait until the month is over, you’re looking in the rearview mirror. By the time you see a problem, you may have already repeated it for several weeks!
Your formal monthly reports still matter. They just shouldn’t be the first time you look at what is happening.
Questions to Ask Your Bookkeeper
Your bookkeeper keeps your financial records current and accurate. Here are some questions you can ask if the information isn’t immediately accessible when you login to your accounting software:
- Are all bank and credit-card accounts reconciled and up to date?
- Are there uncategorized transactions or questions waiting for me?
- Who owes us money, and how much is past due?
- What bills, payroll, loan payments, and tax payments are coming up?
- Are there unusual expenses, duplicate charges, or changes I need to look into?
- When will my monthly books be closed and ready to review?
- Is there anything my CPA still needs from us?
You want more than clean books before year-end. You want reliable numbers you can use to run the business now.
Questions to Ask Your CPA Before Year-End
Once your books are current, schedule a tax-planning meeting with your CPA, ideally in September or October, then again in December. Tax preparation tells you what happened. Tax planning gives you time to make decisions before the year is over.
What Am I Projected to Owe?
Ask your CPA to estimate your federal and state tax liability based on your results so far and what you expect for the rest of the year.
A few follow up questions can include:
- Are my estimated payments or withholding on track?
- How much cash should I set aside?
- When will those estimated payments be due?
- What would change the estimate before year-end?
Many business owners and shareholders may need to make estimated payments during the year. The IRS provides general estimated-tax information for small-business owners, but your CPA can tell you what applies to your situation.
Is There Anything I Can Still Do This Year to Reduce My Tax Liability?
Include questions to ask your CPA about tax-law changes, deductions, credits, retirement contributions, and other deadlines that may affect your business.
If you are already planning to buy equipment, pay bonuses, hire, or make another large financial move, talk with your business coach about how the timing may affect your cash flow and with your CPA about your taxes.
Here’s the thing, you won’t want to make a purchase only to get a deduction. Spending a dollar to save part of a dollar usually does not make sense. Make sure the decision is good for the business first, then understand the tax impact.
Does My Business Setup Still Make Sense?
As your business grows, the entity structure or owner compensation that worked a few years ago may no longer fit.
Ask whether your entity, payroll, salary, and owner distributions are still being handled appropriately. These decisions can have tax and legal consequences, so get advice from the professionals who know your situation.
What Do You Need From Me Before December 31?
Leave the meeting with a clear list of answers. Below is a list of possible questions you can ask:
- What decisions need to be made?
- What documents or bookkeeping corrections are still needed?
- What payments or contributions need to happen?
- What are the deadlines?
- When should you meet again?
Don’t leave with “we’ll reconnect later.” Put the next steps and dates on the calendar.
What You Should Review as the Business Owner
Your bookkeeper and CPA each have a role, but neither replaces you as the owner.
Weekly or at least twice a month, review your financials:
- Cash in the bank
- Money expected to come in and go out
- Past-due invoices
- Upcoming bills and tax payments
- Sales and the few key numbers that drive your business
After your books are closed each month, review your profit and loss statement, balance sheet, cash flow, budget compared with actual results, and profit margins.
You don’t need to study every line. Look for what changed, what surprised you, and what needs a decision.
If you’re still unclear about why you can show a profit without seeing that money in the bank, start with the difference between profit and cash flow or connect with a business coach who can guide you.
A Simple Plan for Your Meeting
Before you meet with your CPA, make sure your books are current. Bring your year-to-date financial reports, estimated tax payments, payroll information, major purchases, and your best estimate of revenue and expenses through December.
You don’t need a perfect forecast. You need enough information to have a useful conversation and enough time to act on it.
Frequently Asked Questions
When Should I Meet With My CPA for Year-End Tax Planning?
In my experience, late summer or fall gives you time to update the books, estimate the rest of the year, and act on your CPA’s recommendations. Your CPA may suggest another check-in closer to year-end.
How Often Should My Bookkeeping Be Updated?
At least twice a month, and more often if your business has a high number of transactions or tight cash flow. Your accounts should also be formally reconciled and closed each month.
Can My Bookkeeper Give Me Tax Advice?
Your bookkeeper generally maintains your financial records. Tax advice should come from a qualified tax professional who understands your business and personal situation.
What I Wish I Had Known Earlier
I wish someone had told me that hiring financial professionals did not mean I could hand over my numbers and stop paying attention.
Once I learned how to review my financials, ask better questions, and plan ahead, I could make decisions with much more confidence. That knowledge changed how I ran my first business, and it is something I now coach my clients on and use in my business coaching business.
If your financial reports arrive too late, don’t make sense, or aren’t helping you make decisions, schedule a complimentary 20-minute strategy call. We’ll talk about what you need to understand and review to feel more in control of your business finances for growth and peace of mind.
*The recommended questions above are not an exhaustive list, but are meant to start and guide conversations. This article is for general educational purposes, and is not tax, accounting, or legal advice. Talk with your CPA, tax advisor, and attorney about your specific circumstances.*