It's the end the of financial year and now the time has come again, where your tax accountant needs to do your financials and tax return. But what do they do and how do they do it? In this video we explore how they do your tax work and what you need to do to minimise their fees, saving you and your business.
As a business owner at this time of year, you're probably concerned about understanding your tax liability, or likely eager to receive your refund (if you’re due one) as soon as possible.
By adopting a methodical approach (yes, shock horror, accountants and methodology, who would have thought?) and establishing clear communication with your tax accountant, you can both reduce the accounting fees your business pays plus expedite the tax return process.
The first step is to ask your tax accountant specifically what you can do to get their fees down. For example:
Engage with your tax accountant right after the financial year ends. For Australian businesses, the financial year ends on June 30th, so touch base with your tax accountant in early July.
Then specifically ask for a commitment from your accountant for the completion date of your tax return and financials. For example:
In our experience, we’ve never had somebody push back and say they can’t do that when you communicate clearly and directly.
You may find this surprising, but for tax accountants this is a quieter time of year. So the sooner you request to begin the process, the sooner they can plan for it and put your business into their workflow.
Lastly, once your tax accountant does commit to commencing the process, ensure you provide all necessary information and respond to queries promptly.
Once you’ve established how and when information is going to be delivered, ask your accountant for a quote or an estimate of the cost. This step ensures you both have clarity around your fee expectations, and can hold them accountable to this.
Often the most time-consuming process for a tax accountant is reviewing your company’s balance sheet and profit and loss statement.
Most business owners have multiple entities and individuals associated with the business, so your tax accountant’s goals are simple: proving every balance on your business’ balance sheet, and ensuring nothing on your profit and loss statement is misallocated.
To make the review process as simple as possible, provide detailed descriptions for all your transactions. Instead of a vague reference like "JB Hi-Fi," provide specifics such as "JB Hi-Fi: 4 computer monitors, 12 inches.”
If you're using a cloud-based system such as Xero, MYOB or QuickBooks that your tax accountant can log into and see transactions themselves, you might not need to provide all the general ledger details.
However if you use an industry-specific system rather than a general accounting system, which they’re unlikely to get access to, you may need to provide more information at a transactional level (via exporting PDFs, for example).
Develop an explanatory document to detail discrepancies or unusual transactions. This helps pre-empt any questions your accountant may have.
For example, we’ve seen where a client has made a mistake on their last bank reconciliation of the financial year, but they provided an explanation along the lines of, “The reconciliation says $100 but the statement actually says $98, and we've rectified it at the start of July next year”, and the tax accountant was able to sign off on that.
Your tax accountant needs to verify every balance on the balance sheet. Here's a checklist of the documents you need to provide for a smoother process.
Copy and paste this in an email to your tax accountant:
Hi [Name], I'd like our business to get an early start on wrapping up the financial year.
If we get the required information to you for [Business Name] by 30 July, and we ensure that we respond to all queries within 1 to 2 business days, can we expect to have our financials and tax returns completed by 31 August?
Regards,
[Your Name]
By following these steps, you'll not only improve your relationship with your tax accountant, but importantly, save money and time within your business.
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