How to Find the Right Tax Advisor for Your Business
Shift from reactive to proactive to make the most of your finances
Taxes often have our attention in the fourth quarter-and for good reason. Yet we can be far more effective at year-end if we are leveraging tax strategies established and implemented throughout the year. We sat down with an expert to learn how businesses can shift from reactive to proactive when preparing taxes. Chris Middleton, Enrolled Agent and Certified Tax Coach, of Bridges Tax Strategies suggests these strategies for finding a tax advisor who can help you optimize your taxes while optimizing your business.
Seek operational value beyond the tax return
When you have a strategic financial plan, saving on taxes can put you on the path to reaching key business goals. Accountants are uniquely positioned to inquire into business operations and recommend best practices that increase efficiency. You'll know yours is focused on delivering value beyond the tax return when they ask questions such as:
- How is your business structured?
- Do you have plans in place for employee retention, succession planning, or handling business acquisition of equipment?
- What are your businesses' biggest blind spots around tax strategies and planning?
- Who is performing the work? (Is there a spouse involved in the business?)
- What are your sources of revenue?
- Where are you going with your business? How can we adjust your course to fulfill future plans?
With conversations like these, tax strategies become launchpads for business strategies such as employee retention or leveraging resources for acquiring a new business. The right tax advisor will help you make decisions not just about money, but where you invest your time and your marketing efforts. They'll serve as a sounding board and guide for realizing efficiencies in every dimension of the business.
Consider a certified tax coach
When a business hires an enrolled agent (EA) or certified public accountant (CPA), it can expect good tax-reduction advice such as: form a corporation or put employee benefits in place to help retain your team. But the gap between advice and action can be significant. What if you're too busy to take action or don't know where to start? What if you implemented the advice but don't know how to measure its value or impact? A certified tax coach can help bridge this gap.
A certified tax coach (CTC) works with clients over a specified engagement period to create a proactive strategy, then implement it. Licensed to operate nationally and working digitally with clients, they are entirely dedicated to improving your results. If other trusted advisors such as a CPA contribute to you finances, the tax coach will collaborate with the entire financial team and advocate on behalf of your business to help those relationships serve you even better. Learn more about certified tax coaches and find one that's right for your business.
Case Study: $24,000 of deductions with the Augusta Rule
Middleton recognizes that business owners are so busy working in their business that it's difficult to make time to work on the business. That's where he comes in: establishing financial strategies, ensuring accountability, and helping businesses move from vision to execution. For example, advising one client that she could rent her home to her business for up to 14 days of tax-free income under the Augusta rule, Section 280A(g) of the Internal Revenue Code, Middleton helped her generate $24,000 in found deductions for the monthly team strategy meetings she was hosting at her home. "Your business could be writing you a check for the event that you just hosted," says Middleton. "My client expected that I'd advise her incorporate her business and contribute to her retirement plan. Those are great strategies, but there's a lot more that you can do."
Interview prospective tax advisors
Whether you are seeking strategic guidance from your current tax advisor or exploring a new relationship with an EA, CPA or CTC, these screening questions can help you find a proactive financial advisor:
1. Are you interested in an advisory role?
- Can you help my business implement the advice you give?
2. Tell me about the last time you brought a tax-savings strategy to your client?
3. How well do you know my industry?
4. Do you see yourself as part of a financial team?
- When was the last time you worked collaboratively with a client's business attorney or financial advisor?
- What was the impact or result of this collaboration?
As we face economic uncertainty about the future both locally and nationally, look for a tax advisor who can help you navigate the flux. "The right advisor will focus on what is in your scope of control so you can sleep better at night," says Middleton. Together, you and your tax advisor can make the most of your business finances today and tomorrow.