Successful businesses don’t wait until tax season to ask important financial questions. Throughout the year, business owners face decisions that can impact taxes, cash flow, growth, and long-term success.
To help, we’ve asked our CPAs to answer 10 of the most common tax, accounting, and audit questions business owners are asking in 2026. Whether you’re planning ahead or looking for practical guidance, these insights can help you make more informed financial decisions.
1. The tax law changed in 2026. What should I be doing differently before year-end?
“Proactive tax planning based on your unique circumstances is especially important this year. Tax laws have changed enough for 2026 that relying on last year’s tax plan could result in a higher tax liability if you do not take certain actions before December 31. The widely anticipated 2026 TCJA ‘tax cliff’ largely did not occur. Instead, new legislation made many tax rules permanent while also changing the value of traditional year-end planning strategies. Tax rates are more stable, several business deductions and tax credits are more generous, and planning around tax deductions may need to be approached differently.
For business owners and high-net-worth individuals, the right answer is different for every taxpayer. Before year-end, it is important to determine whether you should accelerate or defer income, acquire and place equipment in service, maximize pass-through business deductions, evaluate state tax planning opportunities, or adjust your charitable giving strategy. Certain deductions and incentives may be more valuable than in prior years, while other rules include new limitations, phaseouts, or effective dates that require careful analysis. As your CPA, our role is to understand your specific situation, quantify the tax impact of these changes, and provide proactive recommendations before year-end — while there is still time to take action.”
Tax Partner at Wright Ford Young & Co.
2. Should I keep my business as an S Corporation, or is it time to reconsider my entity structure?
“My general rule of thought is it’s difficult to unwind an S corporation and should not be attempted unless there is a very real reason to consider doing. One of the ‘cons’ of an S corp vs. a partnership is that all profits and distributions must be allocated pursuant to ownership of shares. A partnership may provide better options for allocations under certain circumstances, such as rewarding a partner who has had great success in a given year with special allocations of profits and cash distributions. However, an S corp cannot simply ‘convert’ to a partnership or LLC; the S corp generally must liquidate then form a new partnership, and such liquidation is generally a taxable event. A tiered structure may be considered, where the S corp forms a new partnership with other member(s) and this could provide some flexibility.
There is a lot to consider here and much discussion with advisors is needed. All this said, I generally advise against the S corp converting to a C corp unless all facts and circumstances provide the C corp is a better option; the exit strategy from the S corp vs. C corp is usually much more favorable.”
Senior Tax Partner at Wright Ford Young & Co.
3. Can my business survive an IRS audit? Here are five things we look for first.
“An IRS audit can be a daunting experience that may take significant time, money, and frustration. In this article, I’ll walk through five things business owners should understand to help navigate the process.
IRS Audit Types:
The IRS notifies both business and individual taxpayers of an audit by mail. From that IRS notification letter you can generally determine if this is a ‘by mail’ audit or an ‘in-person interview’. If the audit is considered a ‘by mail’ audit the IRS letter will request additional information about certain items shown on the tax return such as income, expenses, and deductions. If the audit is an ‘in-person interview’ the interview may be at an IRS office or at the taxpayer’s home, place of business, or a representative’s office. The in person audit tends to be for more complicated cases and generally comes with a detailed request list of items the IRS wants you to provide them for this ‘in-person interview’.
Representation:
Utilizing your CPA or Attorney for representation can be critical for making the experience go smoothly. A representative can save you significant amounts of time dealing with the auditor, they can put together a clear and concise response package to IRS audit information requests, and can utilize their place of business for “in-person audit” meetings versus having an IRS auditor at your home or business. A representative can also help coach a tax-payer for when the auditor requests an interview with the taxpayer directly.
Records:
The IRS suggests keeping tax-related records and financial information for 3 to 7 years. The statute of limitations for the IRS is 3 years and in California this is 4 years. So at the very least for a California resident all records to prepare a tax return should be kept for at least 4 years after the filing of the tax return. That being said certain records should be kept even longer to protect against audits and prove your financial history. This would include property and asset records like deeds, purchase prices, closing statements, and improvement receipts. This would also include depreciation schedules, business formation information, and lastly it can be a good idea to keep all filed tax returns indefinitely, as they serve as your foundational financial history.
Risk:
Develop a strategy and plan for assumptions made and potentially risky areas on your return. Work with your representative to address any potential areas the IRS may target. This way you have an understanding of the risk, the potential tax consequences, and a strategy for discussing the position taken on the return with the IRS. Sometimes there is room for negotiation with the IRS auditor or even the opportunity to concede a smaller issue to close the audit sooner.
Current State of IRS and Timing:
As of July, 2026 when this article was written my experience is that with the IRS staffing reductions and technology delays means that things like audits, identity theft cases, and paper-filed return processing are taking substantially longer than they used to. My recent experiences include auditors taking over a year to get back to audit response packages, whole audit teams changed up in the middle of the audit, and less overall audit requests.
At the end of the day an IRS audit does not have to be a mystery. With the right records, a thoughtful strategy, and experienced representation, businesses can often make the process more manageable—even if it takes time to resolve.”
Tax Partner at Wright Ford Young & Co.
4. I’m making more money than ever—why is my tax bill still so high?
“We love to receive this question. It means there’s more opportunities to provide value to our clients and strategic planning to our high net worth individuals. Higher income often means more than just paying tax on the additional earnings. As your income increases, you may move into higher tax brackets, lose certain deductions or credits, become subject to additional taxes such as the Net Investment Income Tax, and face limitations on various tax benefits.
This is where the right CPA can help to reduce this tax burden. With proactive tax planning, there may be opportunities to maximize available deductions and tax credits, implement tax-efficient wealth strategies, and structure transactions in a way that minimizes taxes. The earlier planning begins, the more options are typically available.”
Tax Partner at Wright Ford Young & Co.
5. What financial reports should every business owner actually review each month?
“Financial literacy is important and every business owner should be reviewing their company’s financial performance on a monthly basis. But first and foremost, this information must be accurate and timely. Without accurate and timely financial information, a business owner is unable to make properly informed decisions. Ideally, a company’s books should be closed with accurate information by the 2nd or 3rd week of the following month. At that time, business owners should be reviewing their company’s balance sheet, income statement and statement of cash flows.
In addition, comparing these amounts to budgeted/forecasted amounts or to prior year’s numbers is also a great way to review financial performance, spot errors or irregularities and be able to make timely corrections or decisions to better drive the financial performance of their company. Aside from these reports there are a number of additional financial reports or key performance indicators that can be developed and monitored in order to ensure the company is tracking in the right direction.”
Managing Partner at Wright Ford Young & Co.
6. Is AI changing accounting—and should business owners be using it?
“Processes that were once highly manual are increasingly being supported by AI-powered tools. These solutions can assist with transaction categorization, invoice processing, bank reconciliations, accounts payable workflows, cash flow forecasting, anomaly detection, and financial reporting, among other processes. When implemented thoughtfully, AI can help businesses save time, reduce costs, improve accuracy, and access financial information more quickly. AI can assist with routine, repetitive tasks, but it still requires human oversight to verify that the data, assumptions, and reports being produced are complete, accurate, and appropriate for the business context.
Professional judgment remains essential in areas such as tax planning, wealth management, business compliance, financial audits, and the implementation of complex accounting standards. AI should support—not replace—the expertise, experience, and practical insight that CPAs and business advisors bring to important financial decisions. As organizations evaluate AI tools, they should also consider data privacy, cybersecurity, internal controls, user access, vendor oversight, data quality, and applicable regulatory requirements. Used appropriately, AI can be a valuable resource for business owners to amplify productivity while reducing costs and increasing both employee and customer satisfaction. The best results come from pairing technology with sound strategy, effective controls, and trusted CPA guidance.”
Audit Partner at Wright Ford Young & Co.
7. What are the biggest tax mistakes successful business owners make?
“Some of the biggest mistakes I’ve seen made by business owners make include the following:
- Not being prepared for tax liabilities due to no tax planning – tax planning fees usually pay for themselves
- Taking too large or too little salary – reasonable salary for S corps / Guaranteed Payments for partnerships, what is best amount?
- Not including advisors early on in M&A considerations – include lawyers and accountants before an LOI comes
- Treating the business as a retirement plan – diversification should be in play
- Poor financial records – need to upgrade internal accounting for better information and controls
- Waiting too long to sell – some owners think their business is worth more than it is -get good advice
- Being too dependent on the owner – grooming of future leaders will pay off
- No succession plan – talk with your advisors annually on this
These are just some of the areas to focus on that can minimize potential mistakes.”
Senior Tax Partner at Wright Ford Young & Co.
8. How much cash should my business really keep on hand?
“This is a very company-specific question with no right or wrong answer. I would first say that a business should keep enough cash on hand to meet its short term operating costs (generally 3 to 6 months) as well as planning for its future expenditures. If a business is cyclical this would be a larger amount. If a business is steady, this could be a smaller amount. Either way, working with your CFO to forecast future cash inflows and expenses should help to predict what this amount needs to be. In addition, if your company is planning for a large purchase then an analysis to determine if cash or debt is appropriate can be used to determine the appropriate course of action and future cash needs.
When I see a company growing their cash balance year over year for many years, I will usually suggest a treasury management strategy to earn additional returns on this while trying to mitigate the risk of theft. There are two important points to note here. First, when a company has excess cash on hand, a business owner should have that cash working for them, earning additional returns. Second, this excess cash could become a target if the company is sued or if an employee has access to it, without the proper controls in place. A strong CPA can help a company manage cash flows, plan for future growth and protect this liquid asset.”
Managing Partner at Wright Ford Young & Co.
9. I’m thinking about selling my business in the next few years. What should I be doing today?
“The best time to prepare for the sale of your business is years before it’s actually sold. The decisions you make today can have a significant impact on both the value of your business and the taxes you’ll pay on the transaction. Some important steps include reviewing your entity structure, evaluating opportunities to increase tax basis, organizing your financial records, and considering whether strategies such as gifting or estate planning should be implemented before a sale. The earlier the planning begins, the more flexibility you’ll have to maximize your after-tax proceeds.”
Tax Partner at Wright Ford Young & Co.
10. At what point should someone with significant wealth stop using a tax preparer and start working with a tax advisor?
“The decision to move from a tax preparer to a tax advisor should be considered when tax mitigation, estate planning, and asset protection can create meaningful long-term value. For individuals and families with significant wealth, tax planning is not limited to preparing and filing an annual return. A tax preparer generally reports what has already happened, while a tax advisor helps identify forward-thinking strategies designed to support future growth, preserve wealth, and reduce unnecessary tax exposure.
For example, a taxpayer with significant Bitcoin wealth may benefit from working with a tax advisor to evaluate diversification strategies, manage potential tax consequences, and identify tax-mitigating investment opportunities. This type of proactive planning can help reduce tax liability while also creating a more balanced investment portfolio. A diversified asset mix may also support broader estate planning and asset protection goals. If your wealth has reached a level where tax decisions can significantly impact your future, it may be time to move beyond tax preparation and engage a trusted tax advisor.”
Tax Partner at Wright Ford Young & Co.
Final Thoughts
The questions business owners ask today can shape the financial success of their business tomorrow. From tax planning and cash flow management to accounting processes and audit readiness, proactive conversations with your CPA can help uncover opportunities, address challenges, and support long-term goals.
Every business and individual has unique circumstances, so there is no one-size-fits-all approach. If you have questions about your tax strategy, financial reporting, or future planning, contact a WFY advisor here to help provide guidance tailored to your goals.
Wright Ford Young & Co. is headquartered in Irvine, CA and is one of the largest local CPA firms in Orange County. WFY is a full service corporate accounting firm offering audit, tax, estate and trust, and business consulting services to closely held company and family business owners. More information about our Firm can be found at www.cpa-wfy.com.