As the end of the year approaches, it’s time to start thinking about your year-end meeting with your accountant. But don’t panic – with the right preparation, this meeting can be a valuable opportunity to assess your financial health and plan for the future. In an episode of The Finance Cafe podcast, host Shauna Frederick is joined by Ashli Phippen, a Chartered Professional Accountant and Co-Founder of online digital accounting firm, Grow CPA. Together, they discuss the importance of being prepared for your year-end meeting, and share five tips for making the most of this crucial event. From understanding your financial information to setting realistic goals, these tips will help you approach your year-end meeting with confidence and clarity. So whether you’re a seasoned entrepreneur or just starting out, tune in to this episode and get ready to take your business to the next level.
Reflect Before the Meeting
Before you meet with your accountant, take some time to think about how the past year felt for you. Did it align with your intentions and goals? Were you working more or less than you wanted to? Did you spend enough time working on your business, rather than just in it? This is your opportunity to evaluate the balance in your life and business and see if it works for you. By starting with reflection, you can set the tone for a successful meeting and ensure that your accountant understands your priorities and goals beyond just the numbers. So take some time to reflect before your meeting and come prepared to discuss not just the financials, but also your overall satisfaction with your business and life.
“Did I spend time working on my business or just in my business? It’s really easy to have your head down, doing the client work, working in your business, but being able to have time to work on your business, it’s growth, it’s marketing, it’s finances, etc, is really important.”
-Ashli Phippen
Share Your Reflections With Your Accountant
Your accountant should be interested in knowing how your business performed and should explain the financial statements in a way that you understand. If you don’t feel like you got what you needed from the meeting, it’s okay to find another service provider. During the meeting, pay attention to your total assets, liabilities, revenue, and profit. Compare these numbers to last year’s figures and look at your profit margin to gain insight into how much revenue you’re keeping. By doing this, you can layer more education into your overall financial knowledge and build your confidence as a business owner. Remember, the ultimate goal is a healthy profit margin, not just revenue growth.
Get Clarification on Your Tax Obligations
One of the most critical aspects to prepare for in your year end meeting is taxes, which can likely be one a high cost for your business. Therefore, it’s crucial to understand why your tax bill is what it is and what to anticipate for the next year based on your goals. An excellent strategy is to plan a mid-year reach-out to your accountant to get a tax estimate based on your next year’s goals. Small business owners should set up a system to save for future taxes, including setting up a separate bank account for tax savings and encouraging automatic transfer. Failure to pay taxes on time results in penalties and interest, which are not tax-deductible. Remember that paying taxes means your business is making money, and your accountant can help lower your taxes by planning strategies. In summary, ensure that you understand your tax obligations, have clear instructions, and make payments on time to avoid penalties and interest.
Talk About Your Compensation Strategy
One important topic to discuss in this meeting is your compensation strategy. This includes the amount that you are retaining from your business for personal purposes, as well as any bonuses or dividends issued by your accountant. During your meeting, it’s important to clarify why your accountant is recommending a certain compensation strategy, and how it aligns with your personal financial objectives. For example, if you have a goal to contribute to your RSP, a dividend may not be the best option as it doesn’t grow your RSP room.
Make sure to discuss your personal financial needs with your accountant, such as mortgage payments, car payments, and childcare expenses. By working with your accountant, you can efficiently structure your compensation in a way that achieves your goals and minimizes tax consequences.
If you’re a sole proprietor, your compensation is based on your taxable profits, but for incorporated businesses, compensation can become complex and have far-reaching consequences on your personal finances. So don’t wait – start the conversation with your accountant now and get your compensation strategy in alignment with your goals.
Reflect on the Financial Services Your Business is Receiving
While filing your taxes is important for compliance purposes, it doesn’t necessarily provide much value for you as a business owner beyond basic compliance. So it’s essential to assess whether you’re with the right accountant who speaks your language and whether you’re receiving the right services.
Take the time to reflect on the services your business is receiving and whether they align with your goals. Are you spending enough time working on the financial side of your business? Reflect on what was missing from your last meeting, and if you’re not comfortable sharing your goals with your current accountant, consider finding someone else who might be a better fit for you and your business.
Building networks and connections with other entrepreneurs can help you find additional support for services like quarterly meetings. Remember, as an entrepreneur, you got into business to solve a problem and provide a solution, but understanding the story of your financial statements is crucial for the sustainability and longevity of your business. So take the time to reflect on your financial services and ensure they’re serving your business in the way it deserves.
In conclusion, the year end meeting with your accountant is an incredible opportunity to strengthen your relationship with a financial professional who is invested in the success of your business. As a wealth of knowledge and information, they can provide you with insights, advice, and support to help you achieve your goals. Remember to reflect on the financial services that your business is receiving, assess if you are with the right accountant, and if they are providing the right services for your needs. By leveraging this important relationship and serving the financial side of your business, you can leave the meeting feeling more confident and knowledgeable about your finances.
The Finance Cafe