Why Your Business Needs A Tax Pro, Part 1

How’s Your Crystal Ball? 

You’re a savvy entrepreneur and you’re smart about your money, but you’ve found yourself over your head with the IRS. There’s no need to be embarrassed about admitting that you need help sorting out your finances.  The real shame is in hiring the wrong hired gun to tame the taxman. Choose wisely and you’ll avoid red ink and a red face.

No matter how savvy you are about personal finance, the time may come when you’ll realize that you can’t always effectively apply your conventional wisdom about personal money management to the business context. That’s the time to call in a pro. Getting the right advice can make the difference between being successful and being broke.

What can you expect from your hired gun? Well, you can’t expect anyone to unerringly predict the future of Congress’s tax changes, Greenspan’s monetary policy, the rise and fall of the Dow, or guaranteed trends in real estate prices but you have every right to demand experienced, up-to-date professionals who will give you well-reasoned advice.

But Why Do I Need Help, Anyway?

Life (and law) is so complicated these days. There are many traps for the unwary; and we are all faced with the fact that ignorance of the law is no excuse! ‘But, Your Honor, I really, didn’t know! How could I have known?’

The other day, a man came into my office. He hadn’t filed a return for two years. He started a business two years ago. Anyway, his business showed a very small profit. So, why bother?

When I asked him about his rent, car payments, insurance expenses, entertainment costs, and so forth, he quite willingly told me how much he was spending – about three times as much as he earned! Did he have any credit card debt? No.

So, where did all the money come from to support that lifestyle? Mama wired him funds ($2,000 per month) via American Express. It was completely above-board and innocent. What a relief! Did he save the receipts? No, why should he?

This is why you need an advisor in your corner. If this guy were audited, he might face taxes for unreported income, fraud, and underpayment penalties with interest on the whole magilla. He did nothing wrong. But without being able to prove his innocence, he could be found at fault. (Now, he’ll have to write to Amex to get records before they purge 1998 data. When he’s audited, it may not be readily available.)

One call to a Tax Pro would have resulted in his saving the receipts–no sweat, just storage.

 Next
     So, How Do I Know They Know Their Stuff?

2 thoughts on “Why Your Business Needs A Tax Pro, Part 1

  1. Pingback: The Basics: Why is there a NonProfit Tax Status? | TaxMama | Non Profit

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