As you manage and grow your business it is important to make sure that you are spending money on services that provide a benefit in line with their cost. Decisions that you make can have a significant effect on your taxes and your overall profitability.
For many of these decisions, an experienced tax advisor can provide you with invaluable assistance. If your only contact with your accountant is at tax time, then you are missing out on the benefit of timely, personalized tax advice that is available when you need it.
There are many people who may be involved with the preparation of your tax return. Bookkeepers, tax preparers, Certified Public Accountants (CPAs), and Enrolled Agents (EAs) are all accounting professionals that have a function in tax preparation. However, only CPAs, EAs, and tax attorneys are qualified to provide tax advisory services.
The Role and Value of a Tax Advisor
Your tax return is a report on your business’s activity over the course of the year. Decisions you make to buy or lease equipment, invest in new machinery, expand your workforce, or set up a retirement plan – all of these can have a significant impact on your tax bill. A Tax Advisor is familiar with your business and is ready to discuss how these and many other activities could affect your tax liability before you make a decision you could come to regret.
A tax advisor can help you better manage your business by:
- Providing information on the best business structure to align with your personal and business tax goals.
- Staying on top of tax changes that could affect your business.
- Providing knowledge on deductions and credits you should be tracking for your tax preparer.
- Identifying opportunities to lower your tax liability.
- Guiding you through IRS disputes, notifications, or even audits.
- Assisting with payroll tax challenges.
Such a broad skill set requires an in-depth knowledge of the tax code. Having a Tax Advisor on your team can be of considerable financial benefit and provide peace of mind come tax time.
Who is qualified to provide tax advisory services?
The accounting industry employs professionals in a variety of roles, based on their expertise. Specialties include bookkeeping, auditing, analyzing financial reports, and taxes. Those that specialize in tax are CPAs, EAs, and tax preparers.
While a tax preparer knows how to take the appropriate data, input it into the tax software, and generate an accurate tax return, CPAs are experienced tax advisors who work with you throughout the year to help you make decisions based on tax benefits and consequences.
What is right for me?
You may be wondering what you should look for as you expand your accounting operations. If you already have someone preparing your tax return, you may want to consider whether this includes tax advisory services.
If you are unsure, know that a good tax advisor will:
- Stay connected with your business throughout the year
- Be available to decision-makers when tax consequences (or benefits) need to be considered
- Notify you of changes in the tax code that could affect your business
If these are areas you think would benefit your business, it may be time to start seeking out tax advisory services specifically.
Optimize Your Time and Money
At this point, you are probably recognizing the differences between a tax preparer, a tax advisor, and the other various accounting professionals. All are going to be important parts of your accounting department and will frequently work together to keep your business running.
One way to simplify communications and save you financially is to engage a single firm to meet all your tax preparation and advisory needs. With an accounting firm like Diamond & Associates, you can consolidate your bookkeeping, tax, and advisory needs in the hands of professionals who can address all your tax concerns. This means you won’t be needed as a go-between among agencies.
In addition, that translates to a time savings for you, and a reduction in stress from having to provide coordination.
Is it Worth the Cost?
Short answer – yes!
Unfortunately, too many business owners seek out the support of accounting professionals when it is too late. For example, working with tax specialists when your taxes are due leaves little time to implement tax strategies. The same can be said for bringing in accountants when the IRS issues an audit notification.
If you find yourself in this position, you have to involve your accountants. But this is a reactive way to approach tax challenges. It can result in penalties, interest, and fees that could have been avoided if only you had been properly advised.
Working alongside tax advisors and accounting professionals is a proactive way to ensure you stay in compliance (thus avoiding penalties and fees) and assist in saving you money in the end.
Consider adding a tax advisor to your team to ensure you are taking proactive steps to take care of your business. Engaging Diamond & Associates as your accountants will ensure that you have a tax advisor on your side.