By: Genevia Gee Fulbright, CPA, CGMA
Blog Series: Post 3 of 3
Is it ready yet?
Be realistic with providing estimated turn-around times for completed tax return work. Since self-employed returns are more complex with lots of moving parts, it will be very important to provide clients with drop-off dates, follow-up dates, and estimated completion times.
There is nothing like preparing to sign-off on a return then realizing you’re still missing significant information, and the banker is starting to pressure the client to provide finalized returns in order to keep their deadline for closing on a loan.
Use technology to have your assistant, if you are not the one performing the preliminary work, put information needed due dates on the calendar as well as document follow up conversations and data.
True or false: If you are unable to finalize a tax return by the due date, can the client delay paying anything with their tax extension if they do not know how much to pay?
False: If you are working with a client and they are slow with providing information, set a cut-off date, make a calculation, and communicate with the client as to how much funding you estimate he/she should put with the tax extension. Always qualify your estimate so it is based upon information they provided and estimates of additional income/adjustments. Remember, your job is to protect your client, and keep them informed of the laws. There is only an extension to file clients’ tax returns, not to pay taxes (except in very rare circumstances that I’ve seen in over 25 years that I’ve served).
Education is key
Syms, a store founded in New York, used to have, “an educated consumer is our best customer,” as part of its slogan.
Practitioners who educate their clients through sessions, newsletters, and meetings tend to become more successful than those who expect their clients to learn through osmosis.
If you want your clients to become highly successful you must be part of the team of advisors helping them grow. Insist that they re-visit, or at least create a formal business strategy and depending on the size of the enterprise, a business plan, advisory and/or corporate board. If they need assistance and are open to suggestions—help them develop a general operating budget as well as a growth and exit strategy.
True or false: If a company is a start-up, the IRS does not expect them to make a profit.
False: If ever representing an early-stage business during an IRS audit, it will be important for the client to show the formality of the business, marketing strategies, business plan (if available), and documentation that there is an attempt at a profit. It is not assumed by the IRS (nor should the client ever assume) that just because the business is a start-up, the expectation is not to make a profit. Remind clients that if there is not a profit, funds are being pulled from other sources, and that capital is necessary in order to make a positive run at making the business successful.
Feel free to contact me if you have additional questions and happy tax season to you.
Genevia Gee Fulbright, CPA is President & COO of Fulbright & Fulbright, CPA, PA, 25+ year veteran tax preparer, a board director, business strategist and author of Make the Leap: Shift from Corporate Worker to Entrepreneur and Make the Leap: From Mom & Pop to Good Enough to Sell (Infinity Publishing). Fulbright has previously served as Chair of NCACPA MIC, Trustee for the AICPA Foundation and NCM Capital Investment Trust and as a Board Director of M&F Bancorp and can be reached at email@example.com or (919) 544-0398.