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Do you have some goals for next year that require a couple of financial decisions? Have you undergone any shifts in your personal life? How can you and your accountant work together to wrap up the financial year in the best way possible?
In this podcast episode, Joe Sanok speaks about essential year-end conversations to have with your accountant.
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In This Podcast
- Are there any major changes in your business?
- Have you undergone any life changes?
- Has tax law developed?
- Comb through the numbers
- Moving forward
Are there any major changes in your business?
Are numbers way up, [or] are they way down? Are the assumptions that your accountant maybe did your quarterlys on still true?
Where is your business situated right now? Are you ahead of schedule, on track, or completely off the rails?
You need to have some sense of where your business is at before you can take any action, to first assess what’s what and what’s where.
Have you undergone any life changes?
Since your last big chat, what is your life looking like? Have you gotten married, divorced, are expecting a baby, or perhaps had a death in the family?
Any big life changes, whether recently or in the works, are important to take into consideration as you plan the financial aspects of your business.
Make sure your accountant knows about [these changes] because it may change what state you’re filing in, where your quarterlys need to do, [which] calculations they need to do. So, those kinds of changes are important [to note].
Has tax law developed?
Make sure to ask your accountant whether there have been any changes in tax law that could impact you in some way.
I’ll send an article to my accountant and say, “Hey, does this apply to me? This ‘tax relief’ fund or this approach, would this apply?”
Keep an ear to the ground to remain up to date with current affairs and news so that you can have informed discussions about taxes with your accountant, and areas where you could perhaps save or make a change.
Comb through the numbers
Often your bookkeeper is a different person from your accountant, even though they work on the same branch within your business.
Your bookkeeper will look at the day-to-day expenses of your practice and keep them organized for each month’s end.
Then, you’ll take the monthly statements from your bookkeeper to your accountant to create a financial plan for the practice.
Are there any payments and expenses that you can make that are tax deductible?
What do you expect next year [with] regards to your growth? Are there any other changes coming up? Are you hiring? … is there some planning that you could do around [them]?
Have a glance at the year to come and some of the goals that you have.
Can you start to visualize them financially, and bring them to fruition with early planning?
Useful Links mentioned in this episode:
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Meet Joe Sanok
Joe Sanok helps counselors to create thriving practices that are the envy of other counselors. He has helped counselors to grow their businesses by 50-500% and is proud of all the private practice owners that are growing their income, influence, and impact on the world. Click here to explore consulting with Joe.
Thanks For Listening!
This is the Practice of the Practice Podcast with Joe Sanok, session number 819.
I’m Joe Sanok, your host, and welcome to the Practice of the Practice Podcast. Accounting, money, bookkeeping, QuickBooks, all that stuff, oh, man, when it comes to money, I like seeing money in my account, of course. I like transferring money out of my account to my personal account, of course but the nuts and bolts of money, I would have to say, I don’t love that. Sometimes when I look at the big picture trends, I enjoy it, but I really like having someone else look at it and say, here’s how we make sense of this. That’s where it’s really important to have an accountant that you trust. They can help you optimize your tax situation and going into this episode, I am not an accountant, I am not an attorney, as we say at the end of every episode, but just want to make sure that you have a list of really the questions you should be having and discussions that you should be having with your accountant before the end of the year, really, because before the end of the year, if there’s certain spending or changes that, or deadlines, you want to know those things so that your accountant says, oh, okay, yes, you need to talk through these things.
Actually, at the time of this coming out, last week, I’ll have had my year end conversation with my accountant. So what are the things that I go into that conversation around? Well, let’s walk through it. First and foremost is, are there any major changes in your business? Are numbers way up? Are they way down? Are the assumptions that your accountant maybe did your quarterlies on? Are those still true? Really looking at those numbers, understanding, hey, like, are you way down? Are you way up? Do we need to adjust anything in that final quarterly payment in regards to what we’re looking at? So you want to look at that. You also want to make sure that if there’s any life changes like a divorce or if you have full custody of your kids, or if there’s been a death in the family, or any major changes, moving states. Make sure your accountant knows that because it may change what state you’re filing in, where your quarterlies need to go, the calculations that they do. Those changes are really important too.
Then asking your accountant about, are there any major changes in the tax law that affect me? I frequently, if I’m reading something on Forbes or Money or a lot of the things that I follow in my Apple News have to do with taxes. I’ll send an article to my accountant and say, “Hey, does this apply to me? This tax relief fund or this approach, would this apply?” There’s been times that I discovered things that he’s like, “Yes, that would be great,” that he didn’t, he knew about them, but he didn’t make the connection that, oh, Joe should be doing that. So specifically, even looking at real estate and understanding the value of real estate and how to structure that with businesses, listening to podcasts, I’ve shared things with my accountant and said, “Hey, how does this apply to me? Should we be doing LLCs around this and other things?” It really is helpful to be able to try to inform your own accountant and say, Hey, does this apply to me? So changes would be one of the biggest things.
Whether you’re starting a solo practice or thriving in solo practice, getting a group going, or thriving in a group, or launching a big idea or thriving with your big idea, we have a consultant that can help you. With our team, we continue to grow to have consultants that will help you at every single phase of practice. If you want to apply to have a 30-minute pre-con consulting call with me, I would love to chat through where you’re at. The goal is to just hear where you’re at, where you’re headed, where you want to change things, and then to say, here’s where I’d spend my time and money if I were in your situation. We have enough people applying at every phase of practice, we don’t need to squeeze you into anything. In fact, we would hate that. We would rather say, here’s where we can join you and offer some consulting to help you reach your goals faster. Apply over at practiceofthepractice.com/apply if you want some help with one-on-one consulting today. Again, that’s practiceofthepractice.com/apply.
Next, combing through your actual numbers. Now, most accountants that are doing your tax filing are not going to also be your bookkeeper. Oftentimes, your bookkeeper’s going to be a separate service and maybe a separate service within what your accountant does but a lot of times you have your own bookkeeper and your bookkeeper’s looking at the day-to-day expenses, so filing this receipt goes with this expenditure, and hey, there’s this thing in here. I don’t know what this even means. Can you clarify this? Every month, my bookkeeper and his team send us probably 20 to 30 transactions, and they say, “Hey, can you just clarify what these were for so that we can properly file them?”
So making sure that your bookkeeper has everything all cleaned up before your meeting with your accountant, probably having your books reconciled for that month that you’re talking about, that’s before when you’re meeting with your accountant and then saying, let’s look at the profit and loss. Let’s look at allocations. Let’s look at all the different things. Then just say like, what’s going on here? After you’re looking at the books I’d say you want to look at are there, is there spending that you can do that changes your tax situation? There’s a number of different categories that this could fall into. It could be infrastructure that you’re building for the business, so that could be upgrading technology, upgrading phones, if you have a vehicle that is connected to your business in some way, making sure that you’re doing that right, that you’re documenting where you’re driving with that vehicle, how you’re writing that off. Are they depreciating at all in year one or are they doing that over time? That’s your accountant’s job to figure that out. But to say is there spending that I could do that would change my tax situation?
Also, there may be things that your accountant can say if you put your spouse on the payroll and they were working in these ways, that would change your tax situation. In some situations it’s appropriate to have your kids on the payroll and then they can put money into like an IRA or something like that. It may make sense to put extra money into an HSA to max that out, to put money into a simple 401k instead of a Roth IRA, so talking through those structures talking through, if I’m a LLC filing as an S-Corp, is that right now still the best strategy? If I have an online component of my business, does that need to be in my state or can that be in a lower tax state where we can legally have part of the business be in another state where the taxes are much different because it’s not based on something local? So having that conversation as well of tax optimization around retirement and healthcare and life insurance, and just talking through that with your accountant, getting their advice and saying, hey if you put this amount of money in here you get to keep it instead of having that be taxed in a different way. So making sure you’re having those conversations.
Then the last major area I would recommend is talking about moving forward. What do you expect next year in regards to your growth? Are there any other changes coming up? Are you hiring? Where are some of those fires that feel like unnecessary stresses around money and is there some planning that you could do around that? Are there some automations that you could do? And making sure that your accountant is advising you and saying, “Hey next year, here’s a couple things that I think we should do a little bit different to optimize your tax situation. There may be decisions you made this year that you can’t undo, and maybe it didn’t help your tax situation, but next year maybe you can change it. Maybe you can change your tax structure. Maybe you can change the way you do bookkeeping.” So making sure that you have these extra experts looking at your practice, looking at your business, looking at how the money flows in and out and making sure that you’re doing it in a way that protects you legally and ethically and in regards to how you’re doing your taxes and how you are paying yourself.
Thank you so much for letting me into your ears and into your brain. If you need some help around consulting, if you want some handholding, if you want some one-on-one assistance you can do a free half hour pre-consulting call with me and we’ll talk through where I would spend your time and money if I were in your situation. We have enough people applying at every level of private practice. Honestly, we just want to help people get their goals met quicker and at a price that makes sense for them so we don’t squeeze you into anything. If you want to apply to have that conversation with me, just go over to practiceofthepractice.com/apply. There’s some information there, and then we’ll talk through about what the best next steps would be.
Thanks again for letting me into your ears and into your brain. Have a great day. I’ll talk to you soon.
Special thanks to the band Silence is Sexy for your intro music.
This podcast is designed to provide accurate and authoritative information in regard to the subject matter covered. This is given with the understanding that neither the host, the producers, the publishers, or the guests are rendering legal, accounting, clinical, or other professional information. If you want a professional, you should find one.
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