Tax season often feels like déjà vu for accountants: the same errors in the same areas, year after year. While reconciliations and proper categorization are vital, they’re common knowledge. To truly elevate your tax preparation game, it’s time to dive deeper into your clients’ books and tackle the less-obvious culprits that can wreak havoc during tax season.
Here are four overlooked areas that deserve your attention before filing begins.
Related-party transactions, such as dealings with a client’s family-owned businesses or personal accounts, are often overlooked but can trigger IRS scrutiny if not properly documented.
Why It’s Important:
Avoid Red Flags: The IRS scrutinizes related-party transactions to ensure they are conducted at arm’s length and properly disclosed.
Transparency: Accurate documentation avoids misstatements and protects against potential penalties.
What to Look For:
Unusual Terms: Ensure transactions like loans or sales between related parties are conducted under market terms.
Missing Disclosures: Verify that related-party transactions are properly recorded and disclosed in the books.
Intercompany Balances: If clients operate multiple entities, confirm that intercompany loans, payments, or revenue-sharing arrangements are reconciled.
Pro Tip:
Encourage clients to keep thorough documentation of all related-party transactions, including agreements, invoices, and payment records.
Tax season is not just about ensuring compliance; it’s an opportunity to elevate your clients’ financial practices. By focusing on overlooked areas like deferred revenue, fixed assets, owner draws, unrecorded liabilities, and related-party transactions, you go beyond basic bookkeeping corrections and provide deeper value.
These reviews won’t just help your clients during tax season—they’ll also position them for better financial health and strategic decision-making year-round. As their trusted advisor, you have the power to turn tax season from a stressful scramble into a well-oiled process that leaves everyone better prepared for the year ahead.
Good taxes start with clean, accurate books. If your clients’ books need help, it might be time to get Botkeeper working for you. Check out how Botkeeper delivers accurate books efficiently, month after month by clicking below.