What the Top 5% of Doctors Know That You Don't
What the Top 5% of Doctors Know That You Don't
What the Top 5% of Doctors Know That You Don't
What the Top 5% of Doctors Know That You Don't

How To Choose The Best Tax Advisor For Your Business

How To Choose The Best Tax Advisor For Your Business

A great tax advisor can help you reach your financial goals faster than you could on your own. Studies show over 80% of Americans overpay their taxes every year. How is that possible? Most independent optometrists (and business owners in general) do not have a great advisor.

The average tax analysis in my office uncovers close to $20,000 per year of missed opportunities. Obviously, not every analysis generates that kind of savings, and some are much bigger.

Let’s use the average for now. A tax savings of $20,000 per year over a 40-year career is $800,000 extra cash in your pocket. If you were to invest that and earn 6% per year, the value of that planning would add about $3,095,239 to your wealth. Earn 10% per year and that value jumps to $8,851,851!

So the multi-million dollar question is: How do you choose the best tax advisor for you? Not every tax advisor is created equal. There are three main types of advisors out there and it’s crucial to know the differences.

Tax Preparer

This may be the best choice when you’re starting out in your business. Tax preparers take the numbers you give them, put them into the right boxes on the right forms, and file them by the right deadlines.

Preparers typically meet with their clients once per year, when it’s time to file a tax return. They tend to give little to no planning advice.

Why would this type of advisor be better when you’re starting out? Your business may not be producing much revenue or profit. There’s not much need for strategic planning at this stage.

But don’t stay here too long. When you generate at least $50,000 in personal income or $10,000 in income taxes, it’s time to get proactive advice.


Tax Planner

Tax planners are the second type of advisor.  Most CPA firms will list tax planning as one of the services they provide. These advisors are usually planners.

Planners prepare tax returns as well as offer some end-of-year advice. This makes them good to start out with as well. You may be able to hire a planner as your tax preparer and take advantage of their year-end planning when you need it.

The downfall of tax planners is their focus may be narrow. The normal process is they run tax projections – half way through the year and again near the end of the year – and show you how much you can expect to pay in taxes. Then they leave you to plan how you’re going to pay for those taxes.

Their strategies focus on spending and timing. Buy that new equipment or that 6,000-pound vehicle you may or may not need. Defer income and max out prepaid expenses. These strategies might be OK in a pinch.

But are not the cornerstones of a successful, comprehensive tax strategy.

Tax Strategist

This leads us to tax strategist. A good, credentialed strategist is most likely to generate the best tax savings.

Their focus is more comprehensive. A strategist will start by looking at you and your goals, both financial and otherwise.  They will consider all aspects of your taxes in their analysis. Things like your family, other income sources, your business, and your investments.

They use all that information to craft a comprehensive plan made up of many strategies and tactics to be used all year long. A good tax strategist will meet with you several times throughout the year to update your plan for and keep focusing on the future.

This proactive attention is ideal once you have an established business. This means you are generating over $100,000 in personal income or paying more than $20,000 per year in income taxes.

The Bottom Line

Learn how to spot the differences between each advisor. Know what you’re getting when you invest into a relationship with your tax advisor.

A Certified Tax Strategist is most likely a Certified Public Accountant (CPA) or an Enrolled Agent (EA) first. They acquired the knowledge required for their initial licensing, then decided to become a tax specialist.

The best tax experts will generate a return on investment, paying for themselves is as little as 1 or 2 months. So find the best expert with a proven track record in your industry and do what it takes to work with them.

If you liked this post,  check out our Independent Optometrist’s Guide To Financial Freedom

.

ABOUT ERIC

Eric Levenhagen, CPA CTS is the only financial consultant who helps private practice optometrists improve the financial health of their practice with a simple, proven process called Financial Harmony which will reduce their taxes and increase their after-tax profits by at least $10,000 in the first year, guaranteed.

Learn the 5 Biggest Mistakes Costing You Wealth & Personal Freedom In Your Optometry Practice

Fill out this form to get the GUIDE now!