Tax Insights

Ask yourself these 7 Questions

Do I own a business?

If you do, the answer is yes and most mature businesses do engage a tax advisor. Still, we often see start-ups or businesses moving out of this phase looking to conserve funds and think my situation is not over complicated so I can do it myself.  While we understand the rationale, this is a mistake. There can be many opportunities available to taxpayers in terms of maximizing expenses, tax credits, or any number of programs that can increase needed cash flow.

Do I have tax exposure outside my home state at the business or individual level?

If you do and you may without even knowing, it is essential to engage a tax professional to assist. We often see taxpayers or advisors not versed in these issues report incorrect tax liabilities or simply fail to address tax filing obligations. The tax law among states can be very different resulting in lost opportunities or onerous penalties for those not aware.

Am I considering starting or buying a business?

This is where taxpayers can land themselves in situations with unintended consequences.  It could be immediate or down the road. While an attorney should be engaged to legally establish your business, a certified public accountant should be consulted regarding the tax implications to any business structure or structures as different business forms or structures do not have the same tax consequences and can be costly today, later, and difficult to unwind.

Am I selling my business?

If you are, never proceed without competent legal and tax advice in any circumstance. Should I sell assets or the underlying stock of my company? These are complex questions and the two can produce significantly different results leaving you with less after-tax cash. This can result even if you use the optimal form but fail to properly quantify what your selling and for how much.

Am I a high net worth individual or on the verge of becoming one?

If you are, the answer is categorically yes – seek professional tax assistance. The tax rules surrounding many issues facing this type of taxpayer are extremely complex and engaging a tax professional is essential. Mistakes at this level can result in overpayment of taxes or substantial penalties should non-compliance exist.

Do I have any kind of ownership in a non-US organized or based business or foreign bank accounts?

This can result in an onerous cost for non-compliance. This is true whether or not either result in a tax liability in the US. The Internal Revenue Service takes a stern view of taxpayers not meeting these reporting obligations in the form of severe penalties. And, in certain situations a resulting tax liability can result. Foreign reporting rules are very complex and a tax professional should be engaged to address these issues.

Am I experiencing another kind of significant life event?

This can be any number circumstances: marriage, divorce, expanding your family, saving for college, gifting assets, one off income events, etc. All the above require competent tax assistance. Make sure any tax professional you speak with has the requisite skills to guide you through these issues.