If you’re anything like me, each year as tax time rolls around, you find yourself with several ‘quick questions’ for your accountants and tax advisors. Naturally, they tend to range in complexity and, as a result, so too does the amount of time it takes to quickly respond. However, this is also when many of us rely the most on our advisors, and how they respond is a chance to reinforce trust and value within those relationships.
As advisors, understanding the questions they’re likely to come across – before they’re asked – helps in preparing personalised answers with the right information. It also saves them inboxes (and mental capacity) from becoming overloaded. Its important for you to feel confidence in your advisors and build a long lasting relationship with them. With the help of my peers, I’ve compiled 9 questions that you should ask your advisors in the coming months. While this list offers advice, only you know what’s best for your business – simply take from it what you need to do what you do best.
In contrast to last year, do you have a clearer understanding of COVID-19’s financial impact? Can assess how the pandemic has affected a business overall? When communicating this to advisors, ask them to explain the business numbers after striping back the ‘COVID-numbers’ – or taxable government benefits, like JobKeeper – to establish how well you’re doing without inflated support.
Ensure that they are looking for outliers. As well as pandemic grants and funding, these could also include the costs associated with business transformation. From a tax perspective, communicate early on whether these are deductible expenses.
JobKeeper inflates wage expenses, meaning you’ll need to narrow down how much a business’ employees cost without any subsidies in the new financial year. As JobKeeper is a taxable income – EOFY is a chance to get on the front foot of this conversation.
A lot of us are entering the EOFY with a lot of emotion. After all, it’s been a chaotic twelve months. However, its important to ensure that your advisors bring facts, numbers and truth to those feelings of doubt or uncertainty, and to communicate them.
To offer some perspective, first ask yourself the a simple equation; will you spend $4 to save $1 of tax, you’re still $3 out of pocket. Will that tax deduction support your business’ performance? If the answer’s “no”, Its wise to spend more to ‘save’ on tax. Ensure your advisor is on the same page as well.
EOFY is a great opportunity to re-evaluate your business’ structure from both a tax and risk perspective. It’s also a chance to educate yourself on what category your business’ structure falls under, its important to feel confident in how you’re set-up. If you are not confident with your current structure ensure you raise this with your advisors this EOFY.
This question always comes back to; how can I improve my processes with technology? EOFY is the perfect time to introduce new digital tools – especially if you're transitioning to a new accounting software – and learn the skills you need to operate more efficiently. Consider getting your advisors to set you a ‘homework’ for FY22. There are plenty of easy-to-navigate courses available on Xero Central that range in skill level and expertise.
This is an important question especially if you plan to borrow from a bank within the next year. You need to ask your advisors on your maximum borrowing capacity and minimum tax exposure, finding consistency between the two.
When it comes to withdrawing cash, make sure your advisor understand the tax implications involved.
This EOFY isn’t just about tying up FY21; it’s also a chance to prepare for the year ahead. Before you go for advice, be proactive by having a plan for your business in the next twelve months. By tax time, this means that they can have suggestions ready to help you get to where you want to be.
Whether it’s answering a ‘quick question’, or unpacking a complex business plan – how we communicate with our advisors is all about building trust. Behind each and every question is a small business owner who is striving to grow, and if we your advisors can reciprocate that with considered responses, you’re on our way to building lasting relationships.
If you are looking for advise for your business ask our team to connect you with someone in our advisory team.