Each day I talk to business leaders about what they like best – and least – about their Certified Public Accountants (CPAs). The responses range from, “I won’t buy a mobile phone without checking with Mary,” to “Mark is okay, but he likes my rival football team and that’s unacceptable.”

Clearly, there are many factors that can solidify or dissolve a relationship with a trusted advisor such as your CPA. Some, while not preferred, are tolerable; others are absolute deal breakers. Still, the services of a CPA are crucial to the success of any company. That’s why you should ask yourself these five questions to determine if your CPA is meeting your needs, or it’s time to move on to someone else.

Does my CPA understand my business and industry?

As the business development manager of a “Top 50” accounting and wealth management firm, I hear the term “generalist” quite often. In the accounting world, the label applies to a professional with clients in multiple industries. Traditionally, a CPA’s role was to have a working knowledge of each of their clients’ industries. Today, top firms specialize in precise areas of focus to ensure they are experts in the tax laws that govern their clients’ industries. For example, if you own a construction company and the only construction company your CPA works with is your own, are you certain you are taking advantage of every potential tax benefit and functional process available to streamline and grow your operations?

Am I getting the value I deserve?

Value has different meanings for different people. Accounting value is leverageable by:

• Knowing your CPA is always there when you have questions
• Trusting your CPA is current with the ever-changing tax laws that govern business owners
• Counting on your CPA to complete important tasks on time

Value is essentially whatever you perceive it to be. Knowing what is important to you and your business will help you identify problems when your expectations of value are not being met. Make sure you can define “value” when working with your CPA, who must be a trusted advisor to be effective.

Have I outgrown my CPA?

You likely have a good relationship with your CPA. He or she has been with you since the beginning, seen your kids grow up, been there through tough times and good. But does that alone ensure he or she is the best partner for your company today? Can he or she guide you through the complex scenarios your business faces? In many cases after a consultation with their CPA of so many years, a business owner realizes the CPA is not only overwhelmed by the company’s growth, but also ill-prepared to help the company capitalize on its success. This is a dangerous place for a business owner.

Am I receiving the level of service I have come to expect from my CPA?

Do you feel like every time you call, your CPA isn’t in, and it takes forever to get a return call? Are you only meeting with your CPA once a year to drop off your tax documents? Have you ever had to write an unexpectedly large check to the IRS without knowing in advance why you owed so much? Think about what services you believe are most valuable to you, then ask yourself, are you receiving the level of service that you expect from your current CPA?

Are accounting services the only services the firm offers?

In today’s world, accounting firms must take a holistic approach to providing added value and top-level financial services. Does Mike from XYZ Tax do your accounting, Mary from the bank your 401k, and Diane from ABC Investments a business succession plan? What if your business could work with one company in a single location for all that? When the left hand knows what the right hand is doing, you gain significant efficiencies. Can you afford to not have all of your trusted business advisors working together, sharing information, and strategizing about your best options?

Having a trusted advisor as your CPA is more than simply hiring someone who belongs to your club or likes the same sports teams you do. It’s about partnering with a reliable professional who is a specialist in your field of business and who will help guide you and your company to the next level of financial success and security.

Contributing Authors: Peter Roupas, CPA, JD, Amelia Mateer, CPA, Josh Masters,CPA, Nabat Mammedova, CPA, Joyce Gebrosky, and Mary Manolakos

If you’re a small business owner and haven’t yet filed your 2021 business tax return, you’re likely talking to your CPA right now. With the deadline looming, you might be in a hurry to complete your return and put taxes behind you, so you can focus on other more pressing business matters. But don’t rush. There are several things to discuss with your CPA before you finalize your return, including some changes in the tax law resulting from the COVID pandemic that could generate substantial savings for you and your business.

Here are three issues that as a small business owner you’ll want to discuss with your CPA:

Employee Retention Credit

The Employee Retention Credit (ERC) is incredibly generous and broad. It can yield a cash refund of up to $7,000 per employee, per quarter. To qualify, your business must have experienced a 20% decrease in revenue in any quarter compared to that same quarter in 2019 (i.e. to pre-COVID levels). For most businesses, the credit expired after quarter three.

Some small business owners, in particular sole proprietors organized as single member LLCs, are overlooking the ERC. Remember, you need only one employee other than yourself to qualify for the credit. Assume, for example, your business has one employee, an administrative assistant and bookkeeper, whose salary for the year is $40,000. You could potentially receive a credit of $7,000 per quarter for quarters one, two, and three. That’s a total credit of $21,000, a significant cash inflow for a small business owner. For businesses with more than one employee, multiply that credit by your number of employees, and you can understand the magnitude of this generous credit.

If you’re a start-up business, and don’t have 2019 revenues, that doesn’t preclude you from taking the credit. Talk to your CPA to determine if your business qualifies as a Recovery Startup Business.

Many businesses, particularly those with 2021 annual revenues that were similar to pre-COVID levels, are surprised to discover that they qualify for the credit. Remember, if your sales dipped by 20% in a particular quarter compared to 2019, you may qualify. Hence, businesses who experience inconsistent revenues from quarter to quarter during the year should be extra mindful to perform those sales comparisons to 2019!

If you qualify for the ERC, your 2021 tax return will be impacted, as the expenses related to the credit are not deductible, which means an increase in taxable income. So be sure to factor this spike when tax planning with your CPA.

Business Meals

New and more generous tax deductions are available for 2021 food and beverage expenses. The rules—some of the changes are considered temporary by the IRS—include:

• Meals are 100 percent deductible if purchased from a restaurant between December 31, 2020, and January 1, 2023. The IRS defines a restaurant for purposes of this provision as a business that prepares and sells food or beverages for immediate consumption. The definition does not extend to businesses that primarily sell pre-packaged food or beverages not specifically for immediate consumption, like grocery stores; beer, wine, and liquor stores; and vending machines. Nor is an eating facility located on the business’s premises considered a restaurant, even if it’s operated by a third-party.
• The 50 percent deduction limitation still applies to food and beverage purchases made at non-restaurants.
• Entertainment expenses remain non-deductible. However, food and beverages purchased at an entertainment event can be deducted if stated separately from the entertainment costs. They can be on a separate bill or listed as separate line items on the bill.

To ensure you maximize your food and beverage deductions, be sure to discuss those expenses with your CPA.

Retirement Plan Options

Tax time is always an appropriate time to discuss your retirement plan funding options with your CPA, as you have until the filing deadline, including extensions, to make your contribution. Have your CPA run different scenarios to determine the appropriate amount to contribute. And if you need more time to determine your contribution for 2021, consider filing an extension.

If you don’t currently have a retirement plan, setting one up now can yield a tax deduction for 2021. And if you have a retirement plan, consider upgrading to another plan, particularly if your earnings for the year increased over previous years, or if you anticipate increases in your future earnings.

Business owners have several plans to choose from, each with its set of rules and requirements:

Traditional IRA:

Must have earned income

Maximum annual contribution amount: $6,000 (an additional $1,000 for ages 50 and older), or amount of earned income if less than $6,000

Contribution deadline: April 18, 2022 for 2021 contributions

Advantages: contributions are generally tax-deductible; earnings are tax-deferred until withdrawn

Self-Employed IRA (SEP):

Must have self-employment income

Maximum annual contribution amount: 20 percent of net self-employment income after self-employment tax deduction, up to a maximum of $58,000

Contribution deadline: due date of return, including extensions

Advantages: easy to set up and maintain; allows you to choose how funds are invested; you are immediately 100 percent vested; no reporting requirements; does not require recurring contributions

SIMPLE IRA:

For employers with fewer than 100 employees

Eligible employees must have earned at least $5,000 in any two prior years and are expected to earn at least that much in the current year

Employee can elect to defer up to $13,500 (an additional $3,000 for ages 50 and older)

Employer can either match employee deferral dollar for dollar up to 3 percent of the employee’s wages, or contribute 2 percent of wages, up to $290,000, for all employees

Advantages: higher contribution limits than a SEP; not as complicated as a 401k

401(k):

Any employer can set up a 401(k) plan

Eligible employees can elect to defer up to $19,500 (an additional $6,500 for ages 50 and older)

Advantages: the maximum deduction for employer and employee; employers allowed to match employee contributions; employee is generally fully vested sooner; plan is managed by professionals; easy for employees to contribute, usually through payroll deductions

So before you finalize your business return this season, be sure to pause and consider whether you’ve fully vetted the above considerations. The tax savings could be significant.

January 24th, 2022 marks the start of the 2021 tax filing season. With another eventful year quickly coming to a close and the tax season rapidly approaching, preparation is key. Planning ahead and being prepared for the upcoming tax season can help ensure an accurately filed tax return and avoid unnecessary IRS processing issues or delays. Here are some steps that you can take to stay ahead of the game for the upcoming tax season. Gather and Organize All Tax Documents Take the time to collect and organize any 2021 tax documents and financial records you have already, and create a folder or other storage place for items arriving soon. This includes documents such as W-2s, K-1s, 1099s, 1095-A, and others. Having everything organized and together can make the filing process faster and more efficient for you and your accountant. If you’re a business owner with a Schedule C, a rental property owner with a Schedule E, or a farm owner with a Schedule F make sure you have all of your 2021 related data organized. This includes records of how much income you’ve made from your business during the year as well as any business expenses paid. Below is a list of common tax forms and records that you may receive for the filing of your 2021 tax return in the coming weeks.

Who Receives these Forms	Tax Forms
Employees	W-2
Self-employed	1099-NEC
Unemployed Individuals	1099-G
College Students and Graduates	1098-T and/or 1098-E
Investors	1099-Div, 1099-S, Schedule K-1, and/or 1099-MISC
Homeowners	1098-MIS
Retirees	SSA-1099 and/or 1099-R

Do you think you have enough deductions to itemize for 2021? Make sure to include this information in the documents that you organize and provide to your accountant. Providing this information to the accountant that will be preparing your tax return will help the filing process run smoothly and ensure you receive the proper deductions for your situation. Some information you may want to gather, organize, and provide to your accountant if you plan on itemizing include:

• Amounts paid for medical and dental expenses
• Real estate taxes paid during the year
• Personal property taxes paid during the year
• State and local income taxes paid during the year
• Mortgage Interest paid during the year (You will usually get a form 1098-MIS for this, but if it is an intrafamily loan you may not receive one in the mail.)
• All cash and non-cash charitable contributions made during the year

Inform Your Accountant of Any Significant Changes Made Throughout the Year Did you move out of your old home and change your address in 2021? Did you get married during the year or change your name? Make sure to let your accountant know! Any significant changes made during the year 2021 must be reported on your 2021 tax return. Here are a few informational changes that may need to be discussed with your accountant:

• Change of legal name
• Change of address
• Change in marital status
• Any changes related to dependents claimed
• Any birth or death in your immediate family (While adopting or losing a pet may not impact your tax return, we love pets too and want to know!)

You should also inform your accountant of any life events during the year that may have affected your income. Here are a few examples of financial changes that may affect your income:

• Change in employment
• Sale of primary residence or any property
• Purchase of a home
• Start of a new business
• Working in another state (there may be some state filing requirements)
• New investments

If you owed money on your 2020 income tax return, you may have made estimated tax payments for the 2021 tax year. These are quarterly payments that go towards your 2021 tax balance on your return. Make sure to let your accountant know if you made these payments, how much you paid, and when these payments were made. Changes Impacting the 2021 Tax Filing Season With the effects of Covid-19 still being prominent throughout the year, it’s important to make note of these covid relief items that may affect your 2021 tax return. Recovery Rebate Credit At the beginning of 2021, the IRS issued Economic Impact payments (also known as stimulus payments) to eligible individuals. Individuals were eligible for up to $1,400 plus $1,400 for each qualifying dependent. Make sure to let your accountant know if you received the third Economic Impact payment and exactly how much you received. The IRS will be issuing Letter 6475 in January of 2022, which will detail your eligibility for the recovery rebate credit and how much of the economic impact payments you received in 2021. If for some reason you did not receive the full amount of the third economic impact payment, you may be eligible to claim the recovery rebate credit on your 2021 federal tax return. This credit can reduce the amount of tax due and potentially increase your refund. Advance Child Tax Credit Payments   Individuals who were eligible to receive advance child tax credit payments in 2021 should be receiving a Letter 6419 issued by the IRS in January of 2022. This letter will detail the total amount of advanced child tax credit payments that you received in 2021. Make sure to inform your accountant of this information. If you received less than the total credit that you’re eligible for, then the remaining amount of the credit can be taken on your 2021 tax return. If you received more than what you’re eligible for, then you may need to pay the excess amount with the filing of your 2021 tax return. Above the line Charitable Contribution Deduction Individuals who aren’t itemizing on their 2021 tax return can still deduct certain cash donations to charity on their return. This deduction is limited to $300 for individual taxpayers and $600 for married individuals filing joint returns. If you don’t have enough deductions to itemize in 2021, but still made some cash donations to charities during the year make sure to let your accountant know about these donations made. Having a game plan and taking the right steps to prepare for the upcoming tax season can help tax season be less daunting. It can also help with making sure your return is accurate and processed without any issues or hiccups. It’s always a good thing to be one step ahead when it comes to your taxes. Make sure to consult with your HBK tax advisor about any questions or concerns you may have about the upcoming 2021 tax filing and plan accordingly.