What CPAs Do in the Tax Off-Season

June 1, 2022  |  Barton Walter and Krier

The narrow, early year window for filing taxes is likely when you rely most on your tax professional. But these numbers virtuosos keep busy with a host of duties after filing deadlines, too. Ever wonder what CPAs do in the tax off-season? Keep reading to find out how they keep the gears turning and client financials in order throughout the year.

Countless Capabilities Beyond Taxes

Certified public accountants do more than crunch numbers on your Form 1040. They are dependable advisors that provide a litany of services to help clients reach their individual or business financial goals.

CPA Steve Hagstrom of Barton, Walter & Krier shared insight into some of the lesser-known responsibilities tax professionals handle when they’re not calculating and filing a client tax returns.

“We’re a 40-member firm,” Hagstrom pointed out. “We’re smaller, so we wear a lot of hats.”

Mergers & Acquisitions. Hagstrom is a consultant in the M&A department at BWK, so providing those services to clients is one of his specialties. “I consult on mostly transactional situations,” he said, “people buying or selling a business.”

In these situations, CPAs help clients better understand financial opportunities, compliance, and big picture goals when transferring or consolidating a business.

“M&A is a niche we have that other small firms don’t,” Hagstrom noted. “And that’s very unique for our practice.”

Research & Development. “I’m a tax specialist, so I do a lot of tax research for our current client base,” Hagstrom said.

That research involves identifying issues and developing recommendations for finding solutions to tax problems. This might include, Hagstrom noted, providing guidance for operational issues like payroll or equipment purchases. “We make sure everything is structured correctly so there aren’t any tax consequences,” he added.

The tax specialists at BWK also execute R&D efforts for clients with questions about benefits or their retirement plans. “We have people ask about finding the best plan or tax credits that might be available to them,” Hagstrom said. “Or things to look out for if they’re hiring an employee.”

Sales Tax Inquiries. With so many complexities surrounding Minnesota state tax laws, it’s no wonder the BWK Team fields a lot of questions about sales tax.

“There are so many different ways they can tax you,” Hagstrom said. “Trying to figure out what’s exempt and what’s not isn’t always easy.”

And because some BWK clients operate in other states, Hagstrom said it’s important to be well versed in tax laws across the board. “We have state nexus issues to look out for in both income tax and sales tax areas,” he added. “States are always looking for new sources of revenue, so that’s a big one.”

Ways to Prepare for Next Tax Season

To prepare clients for filing next season, Hagstrom went through a quick mental checklist of focus points regarding both personal and business taxes.

“There’s a new tax regime for paying taxes at the entity level,” he explained. Hagstrom handles a good portion of BWK’s business clients but said most of the entities are pass-through entities, “so everything passes down to the individual,” he added. As such, the BWK Team has knowledge and expertise in both business and individual tax areas to better assist its clients.

Hagstrom also said BWK keeps tabs on retirement plans and any changes to them. He and the team may then make recommendations to ensure clients are maximizing tax benefits, personally and if they’re running a business. “Good staff is hard to find,” he said. “You want to be sure your benefit plans and retirement plans are up to snuff.”

He also asks clients to track purchases for tax purposes. “We’re monitoring changes in tax legislation and keep clients up to speed on things.”

In the past few years, Hagstrom said the tax laws “have been changing like crazy.” Even with little things like mileage, the team stays on top of changes and alerts clients as legislation changes pertain to them.

Tracking and Tax Projections

Just as the team at BWK is busy year-round, it also instructs its clients to keep tabs on specific things throughout the year. That way, documents and financials are in order come tax time.

At the individual level, Hagstrom explained that it’s important to track charitable contributions and deductions. He also noted that clients will need help with investment planning, stocks, or retirement plans. “We need to look and make sure everything’s been balanced and that personal financial planning is accurate,” he said.

Business-wise, clients should continually track purchases and acquisitions. And on a quarterly basis, Hagstrom said, he and the team will look at a client’s taxable income for the year to determine any needed modifications.

“We maybe have to adjust our clients’ estimated payments each quarter. So, if things are way up or way down,” he explained, “we need to know so we can adjust accordingly and help the client plan cash-flow wise.”

And at the end of each year, BWK puts together tax projections for its clients. This helps individuals and businesses determine what they’ll owe for the year to help them plan ahead.

“If they have a huge year, they’re going to have a big tax bill coming in April of the following year,” Hagstrom said. “We do tax projections, so they know what’s coming and there are no surprises.”

Helping You Find Solutions

Hagstrom assured the BWK Team has the finest connections to further enhance the client’s experience. “Whether it’s state and local tax, international tax, financial planning, valuations, whatever the case, we have a large network of experts we can reach out to,” he said. “I think our network of professionals that we can reach out to is second to none. And that’s what makes us a great firm.”

This is just a fragment of what CPAs do in the tax off-season. These tax professionals stay up to date on tax laws and changes so they can better help clients achieve their financial goals. If you need assistance keeping tabs on your financials before, during, or after tax season, contact the experts at Barton, Walter & Krier. Their first-class knowledge is available for your financial benefit – today, tomorrow, and all year.