Do you stay in contact with your tax professional throughout the year or only reach out come tax time?
“Regularly scheduled meetings allow your tax professional to provide valuable advice on managing capital assets, equipment purchases, and other major financial decisions,” says Peter Thelen Sr., CPA and founder of Thelen Financial.
Working Effectively with Tax Professionals
Andrew Trower, CPA and founder of Andrew Trower, M.B.A., C.P.A., stresses the importance of working with a tax professional who offers both tax preparation and tax planning services.
“There is a major distinction between these two services,” Trower says. “True tax planning, as opposed to just preparation, involves a higher level of involvement from the tax professional. Optimal tax planning engagements include regular check-ins with your CPA. Ideally, your CPA should serve an important and routine advisory role within your business.“
Eldar Causevic, founder of Denali CFO Services, also encourages working with your tax professionals early and often.
“Certainly don’t wait till December 31, and certainly don’t wait till tax deadlines,” Causevic says. “Start now. Go have conversations and show them your projections for this year and your budget for next year. Look at the whole big picture. What is next year likely to look like? Give them as much information. Give them all of your plans. I think those budgets are going to be super important. If they don’t know what next year is bringing, they have to make a decision in the context of this year.”
Your CPA should proactively advise you on deductible expenses specific to your business, such as equipment, travel, and operational costs. Thelen says that when owners lean on those who only do tax return prep, they miss out on important deductions and tax strategies because they aren’t receiving proactive advice.
Thelen adds landscape companies should seek out a CPA who is not only knowledgeable but also willing to invest time in understanding the unique aspects of the business.
“While it’s not necessary to find a CPA specializing in landscaping, it is essential to work with one who is committed to learning the specifics of your business,” Thelen says. “They should take the time to understand your business structure, revenue streams, and overall financial picture.”
Trower and Thelen stress the importance of keeping detailed records of tools, equipment, vehicles, supplies, and subcontractor payments.
“In the event of an audit, businesses must be able to substantiate expenses to the IRS with receipts or vendor invoices for all expenses,” Trower says.
Preparing for Next Year
Causevic says that an effective tax strategy calls for budgeting for next year and knowing where you expect your business to be so you can figure out your purchases appropriately.
“As we approach the end of the year, those landscapers who operate on a calendar tax year should be preparing an annual budget for 2025,” Trower says. “By compiling a realistic budget, companies can forecast their income and can make decisions regarding the timing of certain deductions.”
Keeping your tax professional in the loop will allow them to share estimated payment coupons for 2025 so you know how much to pay and when.
“Planning the acquisition and disposal of capital assets (like vehicles, machinery, and tools) can significantly impact your tax obligations,” Thelen says. “Work with your CPA to determine the best time to buy or sell these assets to maximize tax benefits such as depreciation and Section 179 deductions.”
Prepaying Versus Deferring Expenses
Working with your tax professional will also help you ensure you have proper cash flow for any tax liabilities.
Thelen notes that prepaying for supplies or services can increase deductions if your cash flow allows.
Cash flow is also a major consideration when deciding whether to defer expenses. If you are tight on cash in the current year and are unlikely to manage a large tax bill, Trower says it might be better to take deductions the following year.
“The main reason an owner would want to defer expenses is if the owner is expecting substantially higher income in the following year (or future years),” Trower says. “This allows the owner to smooth out profits across multiple years. This can be particularly useful for landscaping companies with a large snow removal component due to snow removal’s cyclical nature.”
Thelen says you should avoid deferring expenses like equipment maintenance as it will lead to higher costs later due to compounded issues. Meanwhile, with labor costs, he says it’s wise to stretch current resources and defer additional labor costs until they are absolutely necessary.
“If this year is not a great year and next year is more likely to be a great year, you don’t need any more expenses this year; you need more next year,” Causevic says. “When you expect next year to be a better year than this year, you should consider deferring expenses.”
Anticipating Tax Policy Changes
With Trump’s recent election, changes in tax law are also on the horizon. Thelen says it’s important to discuss these changes with your CPA and adjust your tax strategy accordingly.
For instance, several tax laws from the Tax Cuts and Jobs Act (TCJA) of 2017 are set to expire in 2025 and 2026. While it is expected Trump will extend these tax laws, if the provisions are not made, owners and individuals could face higher tax rates, reduced deductions, and changes to tax brackets, resulting in a return to pre-2016 tax structures, affecting income taxes, estate taxes, and more.
“It’s essential for business owners and individuals to prepare for potential tax changes by staying informed and working with their tax professionals,” Thelen says. “Forward-looking tax planning can help mitigate the impact of any new tax policies introduced by the next administration.”
