As a busy business owner, navigating the complex world of taxes can be daunting, frustrating, and feel like a complete waste of time. Hiring a tax advisor for your business not only helps you save money by identifying little known deductions and tax credits, but it also ensures compliance with ever-morphing tax laws.
So, who makes for a suitable and reliable business tax advisor? Your best choice for a tax advisor, most often will be a well seasoned Certified Public Accountant (CPA) who possesses very specialized knowledge in how to legally decrease your tax liabilities while building you the most personal wealth. These two skills alone (as they do have other skills too!) make them a vital component of any profitable business.
By incorporating tax planning into your overall strategy, your business tax advisor can foresee potential tax liabilities and recommend solutions to minimize those burdens. Furthermore, as a business owner, you can avoid costly mistakes and tax penalties by regularly working with an expert who enjoys staying up to date on the most current tax regulations and changes. In addition, your tax advisor will often take a more proactive approach to your tax needs, provide you with advice on the structuring of your business and financial transactions (to help maximize your tax efficiency) for the best possible outcome. With their financial expertise, tax advisors can handle complex situations like inheritance issues, charitable giving, and trust management just to name a few.
As you can see, in the long run, your tax advisor can help improve your business’s financial health and overall success both in the short term and long term.
Taking on the burden of filing your own taxes can be quite stressful and a tedious time-consuming task, especially for business owners. However, with a tax advisor’s assistance, the risk of making clerical errors and incurring fines is greatly reduced. Tax advisors have the knowledge and expertise needed to ensure that your tax documents are completed accurately and submitted on time. Furthermore, in the event of a tax audit, a tax advisor can act as your trusted representative, providing valuable support during the whole process.
When selecting a tax advisor for your business, it’s also important to verify their credentials. Make sure they are a Certified Public Accountant (CPA) with a valid Preparer Tax Identification Number (PTIN). You can verify a tax professional’s PTIN by checking the IRS directory of registered tax advisors.
Don’t underestimate the power of online reviews in making your decision. Browse through a web pages like Google reviews to gather insights about a tax advisor’s reputation and performance. Pay attention to clients’ experiences. To view, our online reviews, be sure to check -> Our latest Google Reviews.
We have touched on some common services that Tax Advisors provide businesses, now let’s dive into some other services.
A tax advisor can help your business by identifying and leveraging tax deductions. They have in-depth knowledge of the constantly changing tax regulations, ensuring that you take advantage of every possible deduction to the maximum. With their expert knowledge, they can inform you about deductible expenses that you might not have considered, and offer you tips on how to keep accurate records to support your claims.
For example, to maximize your deductions, your tax advisor can help you determine:
Another way a tax advisor can save your business money is by identifying tax credits. Tax credits directly reduce your tax bill, potentially saving both you and your business thousands of dollars each year. And the best tax advisors are well-versed in industry-specific tax credits, and they can help you determine which credits apply speciifcally to your business.
For instance, tax advisors can guide you through:
By helping you identify and claim these tax credits, your business tax advisor ensures that you takes full advantage of all of the available tax incentives, which results in a much lower tax bill. And of course, everyone likes paying less taxes!
When you first consider hiring a tax advisor for your business, it’s very essential to understand the different price structures you may encounter. Tax advisors’ fees can range widely depending on their experience, services offered, and the complexity of your business taxes. Typically, there are two common pricing structures. They are fixed fees and hourly rates.
Fixed fees are a predetermined amount that you agree to pay for specific tax advisory services. This pricing model lets you know how much you’ll be spending upfront and helps you budget accordingly. The fixed fee model can be beneficial because you can identify exactly which services you need, and what they will cost upfront before hand. On a side note, be cautious if selecting a tax advisor based solely on the lowest fixed fee! Price is important, but the quality of service and expertise of the tax advisor should be heavily considered too.
When to Use Fixed Fees
Some situations where fixed fees may be best for you include:
Hourly rates are another common pricing structure for tax advisors. With hourly rates, you pay for the time the tax advisor spends working on your behalf. This pricing model can be best for more complex tax situations or when you require ongoing support and advice. Keep in mind that with hourly rates, it can be much more challenging to predict the overall cost of advisory services upfront, so be sure to ask for an estimate of the time needed to complete the work before getting started.
It doesn’t matter if you run a big or small business, when it comes to your business’s taxes, you must absolutely make the best decision for managing them. The advantages of hiring a tax advisor is pretty obvious,. They can provide you with professional guidance on tax and financial matters, represent your business in a tax audit, offer year-round advice, and reduce tax liability, and help build your personal wealth.
On the other hand, tax software is a cheaper option for those who have very simple tax situations (think single W-2 employees) and are looking to complete their tax returns on their own at the cheapest price possible. Although software may be a good solution for straight forward W-2 filings, utilizing tax software often makes for a very bad choice for businesses in both the short and long term.
While tax software may be very cost-effective, there are some severe limitations you should be aware of. These programs often lack customization options that cater to your unique business needs, which can lead critical deductions or credits. Talk about burning money! Furthermore, they might not provide proactive tax advice or represent you in an IRS audit like a tax advisor would. Always remember, tax software is only as accurate as the information you input, so any mistakes or oversights yo make can potentially lead to a problematic tax return.
Additionally, relying solely on tax software means you may miss out on other comprehensive financial guidance that a tax advisor can offer, such as payroll tax advice or long-term strategic planning. You should also consider the time it takes to learn and navigate the tax software (time is our most important asset outside of our health), especially when it comes to more complex tax situations or ever changing tax laws. And if your taxes involve needs like rental property management, alternative minimum tax (AMT) obligations, or significant life changes, you would probably be better served by a tax advisor or tax firm to help you keep as much of your personal wealth as possible.