Tax advisors are well-versed in laws regulating individual and business taxes. They help clients comply with federal, state and local laws while maximizing their tax advantages and exemptions. While individuals can DIY their taxes if they have a straightforward situation, most people hire someone who can provide more comprehensive assistance. Here are a few reasons why your business should consider hiring a tax advisor:
Reduce Your Tax Liability
A good tax advisor is familiar with the nuances of the tax code. They’ll help you reduce your tax liability by finding deductions and credits that need clarification.
This includes making philanthropy a big part of your business or taking advantage of the IC-DISC export tax break. These deductions can significantly cut your business’s annual tax bill.
Hiring a financial expert is an essential part of any business’s strategy for growing wealth. Paying more than you have to in taxes can lead to a loss of profit, which will affect your overall financial plan. For instance, working with the help of your business taxes by Denver Tax Advisor will help you find ways to reduce your tax liability, which can keep more of your income to save and invest for the future.
Avoid Compliance Issues
Just like a car repairman is needed to fix a vehicle, a tax advisor must file taxes properly. Many people mistakenly assume they can file taxes by going to an HR Block branch or using online software. However, these professional organizations typically take a cookie-cutter approach and only offer tips based on well-known deductions.
An experienced tax advisor will be familiar with your business and its tax laws to develop a strategic and legally compliant strategy. A tax advisor may have an additional credential, such as a CPA, tax attorney or enrolled agent.
Life changes can significantly affect your savings, income and tax burden. A tax advisor will guide you in navigating these changes from a tax-related perspective.
It takes a lot of time to keep up with all the rules and regulations surrounding taxation. That’s where a professional can come in handy.
Mathematical errors, outlier figures and dubious expenses are all red flags for the IRS that can trigger an audit. A tax advisor can help you prevent these mistakes by organizing your records and double-checking your calculations. In addition to accounting expertise, a tax advisor must have strong mathematical abilities and attention to detail.
Maximize Your Deductions
A good tax advisor can help you secure more deductions than your standard business expenses. This is because they will stay up-to-date on tax laws regularly and can give insight into which specific expenses will qualify for the maximum deduction and which ones you can use to reduce your overall tax liability.
They can also advise you on structuring your company to take advantage of tax breaks. For example, they can tell you whether itemizing your deductions or taking the standard deduction is better.
To maximize your deductions, you need to maintain accurate bookkeeping records. This includes sales invoices, bank statements and receipts for all expenses that might be deductible. For instance, health insurance, home mortgage interest, charitable donations and travel expenses qualify for a deduction.
Increase Your Profits
Some businesses can get away with DIY tax preparation when their personal or business taxes are simple. However, a professional tax advisor is essential when they grow or add new assets or complex financial transactions.
A tax advisor has in-depth knowledge of IRS guidelines and other federal and state laws that regulate individual and business taxes. They are also skilled in resolving tax issues with authorities and courts.
If you run a small accounting or tax firm, consider expanding your services beyond simple tax preparation to include bookkeeping, financial planning, and payroll solutions. This can help you maintain profitability all year round. You can market these additional services by targeting clients already signed up for your general tax prep service and offering them a discounted rate on your other offerings.