Cassidy Jakovickas.

Many people don’t talk to their tax professional until the year is nearly over or tax season is already underway. But this procrastination leaves you in a bad position when it comes to your tax strategy, from scrambling to make last-minute decisions to losing out on tax savings opportunities. As both a CPA and the CEO of tax and accounting firm MBS Accountancy, I’ve seen this happen countless times with people over the years. To keep you from tax season scrambles and lost tax savings, I’d like to share my reasons why “earlier is better” when talking with your tax professional about the upcoming tax season.

1. Early birds catch the most tax savings

Meeting with your tax professional in October or November allows you to make key financial decisions that impact your bottom line. For example, if you’re planning capital expenditures, such as equipment purchases, you and your tax pro can plan how you’ll maximize depreciation to reduce your taxable income or use tax-loss harvesting to offset capital gains. If you’ve purchased real estate, a cost segregation study could make sense.  There are a variety of retirement plan options for your business and some need to be set up early to be effective for the current tax year.  There are a variety of tax credits available each year and most require action before the end of the year.  The conversation between you and your CPA about what’s going on with you and your business will result in ideas and action items.   

2. Fixing bookkeeping errors later isn’t always possible

Are your books ready for tax season? Many people focus on the filing and preparation processes when thinking about tax season, but they don’t consider the foundation for it all: their bookkeeping. But it’s important to remember that even small bookkeeping issues trickle up to become big accounting and tax issues:

• Having unreconciled bank and credit card accounts can mean you’ll miss income or over-report expenses.
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• Recording loan proceeds as income can lead to overstated income and inflated tax liability.
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• Failing to separate business expenses from personal ones can cause all of your tax deductions to appear suspect and trigger IRS audits later.
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This is just the tip of the iceberg, so to speak. But it’s important to consider this reality, especially when bookkeeping errors are uncovered during tax preparation that your accountant does not have time to address or resolve for you. 

Before November, accountants and tax professionals are most available to speak with you. It’s best to use this time for bookkeeping review and cleanup instead of waiting until your messy books make a mess of your tax return.

3. Finding a good tax pro will be harder later

We hear from many new clients during tax season that the other firms they’ve called are unavailable to help them or booked out for months with new client tax work. This is understandable since many firms go into client-only mode during tax season. Here’s the first lesson for you: If you wait until tax season to find a CPA, you’ll find that many of the good tax professionals are taken.

During tax season, accounting firms are managing a high volume of clients, which means your tax preparation may be rushed if you wait until December or January. This increases the likelihood of missed deductions, overlooked compliance issues, or even filing errors that could trigger IRS scrutiny. 

Please understand that I’m not saying this oversight is intentional. Rather, it’s just an unfortunate side effect of waiting until a tax professional’s busy season to reach out for in-depth tax planning services.

On the other hand, when you meet with your tax professional before December or January, you get focused attention on your tax needs and thoroughly review your records, correct any discrepancies, and implement tax-saving strategies specific to your business. This ensures that when tax season arrives, your filings are accurate, complete, and optimized, reducing your risk of errors and the need for amendments down the line.

4. Tax estimates make a high tax bill hurt less

In my firm, we insist on quarterly tax strategy reviews with most of our clients. These periodic reviews allow us to sit down with our clients and estimate their upcoming tax liability based on their current tax scenario. We then determine whether any tax incentives can help lower their tax bill. 

For example, we might have them restructure their entity type, accelerate expenses, maximize retirement contributions, or make charitable donations. Once we’ve exhausted options for reducing their tax bill through tax incentives, we look at ways to plan for the tax payments. Often, business owners end up draining their cash reserves with a huge tax bill for which they didn’t plan with their tax advisor.

If you haven’t been doing this kind of tax planning with your tax professional, I have two pieces of advice for you:

• Sit down with your tax professional right away to assess what opportunities are available for you to claim in this last quarter of the year.
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• Consider switching tax professionals since any good tax professional will want to discuss and update your tax plan with you throughout the year to ensure the optimal outcome for you each tax season.
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5. Proactive tax planning keeps you ahead of tax law changes

Being proactive with your tax professional isn’t just a good idea; sometimes, it’s vital to remaining informed and aligned for success amid tax law changes or expiring tax code provisions. 

For example, several key provisions of the Tax Cuts and Jobs Act (TCJA) are set to expire at the end of 2025 (barring any tax law changes, which is unlikely). Here are some key points:

• For individuals: The TCJA’s lower individual income tax rates will revert back to pre-2017 levels, the current standard deduction will be halved (adjusted for inflation), and the Child Tax Credit will drop from $2,000 to $1,000 per child.
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• For businesses: The $10,000 cap on State and Local Tax (SALT) deduction will be removed, the Qualified Business Income deduction (Section 199A) will expire, and the 100% bonus depreciation will be fully phased out by 2026.
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• Other highlights: The higher income thresholds for alternative minimum tax (AMT) exemption amounts will revert to pre-TCJA levels, the doubled estate tax exemption will be reduced by roughly half, and the mortgage interest deduction will increase from $750,000 back to $1 million in principal.
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If you aren’t talking with your tax professional often and early, you’ll miss opportunities to maximize tax opportunities while they’re available. 

Talking with a tax professional now avoids headaches later

The bottom line? It’s better to know where you stand with your taxes, even if you don’t like the answer if you’re making money, than not knowing and finding out during tax season.  Proactive tax planning is essential if you really want to minimize your tax liabilities, avoid surprises, and take full advantage of available tax-saving strategies. Waiting until tax season often results in rushed decisions, missed opportunities, and potential errors. I encourage you to talk with a tax professional this month so you’re in the best tax position during tax season. If you are looking for a new tax professional who can help you stay ahead instead of getting behind in your tax planning, contact my team and I at MBS Accountancy!

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Cassidy Jakovickas, CPA, is president and CEO of MBS Accountancy Corp. in Fresno.