I hear this very often from business owners, particularly from those business owners that owe more in taxes this year than they expected. What they fail to understand is that there are substantially fewer things we can recommend that they do to cut taxes once the year ends!
A smart business owner understands this, and lets their tax advisor help them. Let me illustrate this with two real examples from this last tax season.
Business Owner A dropped off his income tax information in March of 2012 as usual. His business increased in 2011, so when we prepare the return, he owes $25,000—more than he has ever owed in the past. He gets angry, grabs his stuff, tells me I’m not doing my job, and storms out. What he forgot was that the year was already history! There is nothing I can do now to change what actually happened.
Business Owner B also has a good year with an increase in sales and profits. But he calls me in October of 2011 and tells me this. I do a quick estimate and tell him that he is going to owe about $90,000 in taxes. I recommend tax planning, which he agrees to. Now my fee for intensive one-on-one coaching is not cheap. But when we are done, I am able to present him with a plan that is estimated to reduce his taxes to about $25,000. When I do his return, he owes $28,000. (Remember, I prepared an “estimate”. Even the best crystal ball isn’t perfect.) He pays it with no drama and thinks I’m a genius for helping him save $60,000. Not a bad return for my $2,500 fee!
So which business owner do you want to be this year?