252 - 7 Times to Ring a Tax Strategist

On today's episode of the podcast we talk about the times throughout the year you should be hearing from your tax professional (if not, you'll want to reach out to them). 

Have you joined Profit Rx 2.0? You'll get a 1:1 with me, bookkeeping help, office hours and so much more. 

1. At the close of every tax season We file our taxes (hopefully on time) in April and review them with your tax preparer. If your tax preparer isn't reviewing your taxes with you, red flag🚩. Ideally they will also give you advice on what to do in the upcoming year financially, both in business and personally, to better prepare for next year. 

2. Every quarter You need to be paying quarterly taxes. If you aren't hearing from them during this time, you'll want to reach out. 

3. Before the end of the tax year  PLEASE do not go make huge business expenses at the end of the calendar year for the sake of deductions. This is not a decision you should be making without guidance. For example, if you're in the 12% tax bracket this year and expect to be in the 22% bracket next year, it's not wise to be spending a bunch of money in December when you can spend it in January and get more deductions. You'll also want to talk about if it makes sense to form an S Corp and back date it, what a reasonable S Corp salary looks like, etc. 

4. Whenever you have big changes in your business model or business finances  What should you do differently? How can you pivot during the year? When do you need to pivot? How does hiring impact your business? What about a big expense?

5. When big financial stuff happens in your personal life Examples include a big raise for you or your spouse, you have a child aging out of child tax credit age, you win a lot of money gambling, you inherit a lot of money, etc. 

6. When tax laws change This doesn't happen as much as you would think. We haven't had any since 2017. There are minor changes here and there. When those changes impact your business, your accountant, tax preparer, or tax strategist should be reaching out to you. This is why it's ideal to have a tax person who operates within your niche so they stay on top of what will effect your business. 

7. When you move to a different state This is a major life change and can impact your business because certain states may not have sales tax, some cities have their own tax, and you will need to figure out which state(s) you will owe quarterly taxes to. 

If you don't already have someone you can consult on the above, you might want to consider looking into having someone for when the above situations arise. 

A few more questions you want to ask yourself: 

1. Do you need a bookkeeper, a tax preparer, a CPA, and/or a tax attorney? 

Bookkeepers track your business income and expenses and creating your financial reports. Typically they do not provide a high level or finance consulting nor do they usually give tax advice. A tax preparer is typically just paid to do your taxes. Oftentimes people are looking for a high level of tax strategy to come from them, but that's not often the case. Consider how much you're paying for your taxes. If you're paying $500 that's probably not going to come with anything else. If you want to find someone who does tax strategy. You're looking at $1,500 and up and can be $3-4,000 to get you continued support throughout the year instead of just at tax time. A CPA (certified public accountant) is trained to do lots of things and can be trained to do taxes, but oftentimes not. An EA is an Enrolled Agent and they are specifically certified in tax prep. A tax attorney (which is what I technically am) are who you go to typically for high dollar or highly complicated tax situations to work in partnership with a CPA to do the legal research on what is legally allowed in regard to the taxes. 

If you have a bookkeeper or do it yourself, fabulous. You can also do your taxes yourself or hire someone to prepare them for you. The third piece that's often missing is the tax strategy because not a lot of service providers provide it and not a lot of business owners are willing to pay for it but that's where the tax savings can come in. Consider if the person you're already working with can give you strategy and if not, are you ready to outsource or learn on your own? If you're ready to learn, you can get started inside Profit Rx and we can get your tax strategy basics started as part of the free trial. 

If you have questions, ask them in the Facebook group, Braden's Besties or send me a message on Instagram @bradenadamdrake

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