When some small businesses upgrade their accounting solution to a monthly accounting service, they think they’ll pay less in tax. Is this true? Not necessarily.
There are lots of misconceptions about how much any accountant can affect your tax liability. Plus, owing tax means only one thing: you’re making money. So, let’s talk facts.
At CSI Accounting & Payroll, we’ve provided monthly accounting services to small businesses for 60 years. That means we’ve presented these facts thousands of times:
- Fact #1: An accountant can’t directly determine what you’ll owe in taxes, but they can advise you.
- Fact #2: Only monthly accountants can provide a thorough tax strategy.
- Fact #3: Tax strategy is most effective when applied year-over-year with projections, often from a monthly accountant.
Fact #1: Tax Advice
Neither an annual tax preparer nor a monthly accountant can directly determine what you’ll owe in taxes. They can only make recommendations.
Think about credits, deductions, and the timing of when you claim them. Your accountant can’t do all of these things for you, but they can advise you to make certain decisions that may lower your tax liability.
Much of the appeal of monthly accounting services is in their unique ability to provide insights and advice all year long. This can extend way past taxes!
Fact #2: Thorough Tax Strategy
Annual tax preparers can’t offer a thorough tax strategy because they only meet with you once per year, but monthly accountants can do more.
With an annual tax preparer, you may be able to take advantage of some credits and deductions, but you can still be surprised by a large, unexpected tax bill.
With a monthly accountant, you’ll get the same insights on credits and deductions, but you’ll also know what you’ll owe in taxes months in advance to prepare for that payment. If your business is growing rapidly, having this information ahead of time is extremely beneficial.
Learn more about the tax processes of annual tax preparers versus monthly accountants here.
Fact #3: Long-Term Success
Tax strategy is most effective when applied year-over-year. Why? Because your tax liability changes over time, and many tax-lowering strategies can’t realistically be repeated year-over-year.
Here’s an example scenario where someone could save $8,481 versus waiting a year and saving $21,055. Estimating your net income for future years can help you decide when it’s best to take advantage of certain deductions.
Could an annual tax preparer provide this level of advising? Maybe! It’s not very common for annual tax preparers to dive into that level of strategy, though.
Meanwhile, a monthly accountant sees how your business grows throughout the year, every year. They’ll have a much better grasp on projected revenue and how much you should pay yourself as the business owner. All of this can be used to form a year-over-year tax strategy.
Maximize Your Tax Strategy!
Now that you know that accountants can’t directly determine tax liability, only monthly accountants provide tax projections months ahead of time, and tax strategy is most effective year-over-year with projections and advice from a monthly accountant, are you ready to check out monthly accounting services?
If so, please consider CSI Accounting & Payroll! To see if we can be a good fit for your business, click the button below for a free consultation:
Not ready to talk? That’s okay! First, estimate what your monthly accounting fee may be by clicking the image below:
