Add Business Tax Consultants to Your Team
Probably way down on your priority list when you plan to start a new business are business tax consultants. You have your products or services, management functions, office policies, and marketing to think about. Sure, taxes are on the list, and part of your planning will probably be setting up a bookkeeping function and checking into tax preparation companies.
The hard truth is that when you are starting a new business, it is possibly the most important time for you to consider advice from business tax consultants. There will be many more opportunities for money-saving advice, but startup can be a critical time. What business entity structure will you be setting up:
- Sole Proprietorship
- Partnership
- LLC, Limited Liability Company
- S-Corporation
- Corporation
Each of these business entities have different pros and cons as well as differing treatment by the IRS for taxation. Some offer better liability protection for owners, while others offer pass-through of income for tax purposes.
The small business tax consultant can advise you on which is the best entity for your startup, or how your existing business may benefit from a change in entity structure. The pass-through entity is one that passes through business profits to the owners. They then file that as income on their personal tax returns. The income from the business is taxed once at the personal level.
Entities that are not pass-through, such as full corporations, offer excellent liability protection for owners, but income is taxed twice. The profits are taxed at the corporate tax rate, and profits distributed to owners are taxed again on their personal returns. While the pass-through feature may be preferable for a small or startup business, as the business grows there may be a need to change the business structure.
Other Services Offered by Business Tax Consultants
You want to have a team that becomes partners in profitability. The services they provide can grow your business and create a comfortable retirement for you. Look for business tax consultants with:
- Licensed Preparers – There are many licensed tax preparers, each with different responsibilities, obligations, and rights regarding tax preparation and representation. They will keep things on track to help you to avoid the dreaded IRS audit letter. Should the IRS have questions, an appropriately licensed tax professional can represent your interests in front of the IRS.
- Tax Planning – Business taxation is with you always, and planning can keep you from getting burned with higher taxes before taking action to avoid them. Tax planning should be involved before major real estate or equipment purchases to minimize taxes.
- Retirement and Estate Planning – While running a business can be fun, you do it to improve your financial status and lifestyle. A team of business tax consultants will help you to set up retirement accounts while saving taxes with the contributions to them. They can also help you to structure an estate plan.
- Tax Preparation – With all these other services in place, the preparation of your tax returns will be more efficient and accurate.
Pulling all of this together with the right team of business tax consultants can help you to achieve the success you had in mind when starting your business.