Five Reasons a Business Needs a Tax Advisor

Federal, state, and local taxes can be some of the most challenging issues facing a business. Luckily, most large corporations have teams of tax professionals advising them on their taxes. But those benefits are not limited to large corporations. Small and medium businesses can also benefit from tax services. Here are five reasons for businesses to hire a tax advisor:

A Tax Advisor Keeps Up With Tax Laws

Taking into account taxes at local, state, and federal levels, taxes can change many times per year. Using business tax preparation services leaves the work of keeping up with tax regulations and laws to the professionals and leaves more time for the business owner to run his or her business. It is important to keep in mind that some business taxes, such as sales taxes, may be due several times per year. Although some small business owners try to wear many different hats to reduce expenses, the time required to keep up with tax filings and changes in the tax laws may be penny wise, but pound foolish.

A Tax Advisor Can Help a Business Plan for Taxes

Whether a business is planning to make a purchase, add investors, take out loans, or open a new location, a tax advisor can help plan the best strategy and timing to minimize taxes. For example, purchases of business supplies, software, and business vehicles may all have different tax implications. Similarly, a tax consultant can also explain the different tax treatment of raising money by taking out loans versus selling part of the business to an investor. A tax accountant can even help plan the timing and amount of profit distributions and employee bonuses.

A Tax Advisor Can Help a Business Act Proactively to Reduce Taxes

Not only can a tax consultant help a business carry out its plans, but a tax consultant can also help a business act proactively to reduce future taxes. For example, in preparing this year’s taxes, a tax advisor may spot issues that, if altered, can reduce future taxes. A business that purchases office equipment may be better off leasing office equipment in future years, or vice versa. Similarly, a business might miss certain tax deductions or fail to track certain business expenses. A tax advisor can spot these issues and help remedy them before they get out of hand.

A Tax Advisor Can Help With Compliance

With the myriad of taxes that businesses may be responsible for, it often requires a tax professional to keep track of what is due, when it is due, and what must be filed. Many startup businesses simply fail to understand all the taxes that may be due. For example, in some states, a business may have to pay franchise taxes, unemployment taxes, and workers compensation insurance in addition to state, county, and city sales taxes and federal income taxes. While a startup business owner may be unaware of all the taxes that may be due, a tax accountant is in the business of knowing all the taxes that may be due.

A Tax Advisor Can Communicate With Tax Officials

A tax accountant is experienced in communication with tax officials, whether it be to ask a question or to respond to a potential tax issue. Ignoring or mishandling a tax issue can have serious consequences. Local, state, and federal tax agencies have a great deal of power to collect taxes and, without a tax advisor to navigate the process, a business can find itself in serious financial and legal trouble. For example, the IRS can request a levy on a bank account. This will cause funds in that bank account to be held and, after 21 days, the amount owed to the IRS will be deducted directly from the bank account.

A tax advisor does more than file forms with the IRS. He or she keeps up with tax laws to help businesses plan for their future while remaining in compliance with the law and minimizing their tax burden. In the event that issues arise, a tax consultant can help resolve the issue and change the way the business operates to avoid issues in the future.