Every year CPAs bemoan the chaos and rush to file taxes and complete audits for many of their business clients. Would you prefer to have more clients with efficient tax preparation and audit engagements with high realization? How about reduced stress and pressure during busy season and delivering real benefits for the clients themselves? CPAs with clients who plan for year-end well ahead of time are much more likely to file accurate taxes, avoid fees and penalties, have adequately prepared for audits and have accurate revenue and profit projections for the new year. Also, their fees are lower, which is important to client retention. The key is organization and planning.
As a CPA, we are in the best position to help our business clients appreciate and implement a proactive year-end strategy. Not surprisingly, they come down to being proactive, being timely, and minimizing unnecessary costs. Right now, after the turkey has settled, it is the perfect time for CPAs to educate their business clients on the immense value (more than just peace of mind!) that comes with planning ahead versus scrambling to the finish.
- Cost savings: What business doesn’t like to save money? Planning ahead saves on CPA fees and ensures the business is not paying more than it needs to due to lack of time to weigh all of the filing options and scenarios. And don’t forget the savings from avoiding penalties and fees!
- Time savings: By adequately preparing for audits, it means proactively anticipating the accounting and auditing issues the auditors care about. Talking to your auditors right now means no surprise during the audits, and that translates to efficiency – giving business owners and CFOs the time to focus their effort on growing the business rather than handling compliance issue.
- Positive impacts on business credit: Tax returns and audited financial statements are essential credit-scoring components, which are central to fueling long-term growth. Failing to plan ahead raises the chances of inaccuracies and errors on tax returns and financial statements, which can result in negative marks on an organization’s credit-worthiness and stifle future growth potential!
Identifying inefficient clients is the easy part; helping them change their perspective and culture isn’t. Here are some best practices I’ve learned from my own experience with my clients that can help businesses you serve transition smoothly to a timely year-end filing mentality:
- Close the books regularly — ideally on a monthly cadence. Entering transactions throughout the year and closing monthly (completing reconciliations of bank accounts and other balance sheet accounts such as prepaids and accruals) helps to develop a rhythm of your closing process over time, and avoid the stress and mistakes that often result from trying to close out your books once a year. Our experience is this monthly cadence almost always is a lower-cost approach to accounting. Encourage your clients to close their books more frequently, and ideally monthly.
- Review the numbers and project — at least quarterly. Being disciplined and planning ahead can make the difference between surviving and growing. Companies should use historical information as basis for planning ahead. Having regular internal financial discussions about history, targets and projections is essential if companies want to grow with purpose. CPAs don’t need to be in these meetings, but encouraging your clients to have these reviews will help them get ahead of their numbers. It will help your clients start looking forward.
- Reflect upon and forecast where an organization will end the year. Remember that a proactive year-end approach requires leveraging a business’s team to their fullest — and everyone has an important role to play. Management or owners should meet at least once a quarter with the accounting team to review past results. This allows the companies to make necessary adjustments to operations going forward. Owners and management should also meet with their tax accountants and auditors twice a year. This allows the companies to find out what their tax accountants and auditors need and gather and have them ready.
- Make a year-end checklist. CPAs love checklists! They ensure that nothing gets missed. Companies can also benefit from a year-end checklist. This helps them avoid surprises at the last minute and ensure that they have a plan to execute year-end responsibilities smoothly and accurately. At CFO Connections, we began providing our clients a checklist to help them prepare for year end planning. E-mail us to receive a copy so you can give it to your clients.
The bottom line is that planning and operating proactively for year-end is a best-practice approach for success. Doing so leads to many benefits, including timely and accurate filing of tax returns and completion of audit, lower filing costs and audit fees, the elimination of penalties and fees, and better overall business planning. Looking forward, and not just backward, is a key factor for robust company growth. Importantly, if you can help a client change their culture in this way, they will continue to see your CPA firm as a valuable partner as opposed to a necessary expense.
At CFO Connections, our background as auditors allows us to know first-hand how a company can prepare for an efficient audit and reduce audit fees. We now serve as audit liaison for companies who work with auditors on their annual audits. We management a company’s audit process and help them anticipate important accounting and audit issues to avoid significant auditors’ adjustments and last minute surprises. We also help companies with their year end closings and work hand in hand with their tax accountants in seeking out additional tax savings opportunities before the year ends. To learn more about what we can do for you and your clients, please visit our website or e-mail us for a complimentary consultation.