Businesses view taxes like most of us do– as a burden that can’t be avoided. Naturally, companies want to maximize their profitability which means minimizing taxes whenever possible. To be fair, the U.S. tax code provides plenty of opportunities to save on taxes, and a skilled advisor knows what those opportunities are and how to take advantage of them.  A tax consultant is sometimes known as a tax advisor and many Certified Public Accountants (CPAs), financial consulting firms and enrolled agents also qualify as tax consultants.    

Tax consulting services can entail offering accounting, tax and business related advisory to clients.   There maybe some misconceptions of why many small businesses and people don’t utilize the services of a tax consultant. For example, they could think utilizing a tax consultant is only for huge corporations or the rich.  However, people who think this is true don’t realize that a tax pro can save them far more in costs than that tax pro charges.  In order to proactively develop practical tax plans and strategies, experienced tax advisors usually analyze the applicable industry, economic, regulatory and tax issues for a respective business.   Business tax consulting services can range from tax planning, tax compliance, controversy and risk management, specialized services, including research and development, government incentives and tax management consulting.   

Remember a smart tax consultant will have the ability to understand the underlying policy or theory behind tax rules, rather than only focusing on the memorization of code sections, limitation amounts, and various other thresholds.

Minimizing the Tax   

There are tax minimization strategies, which are in accordance with IRS regulations, that businesses can use. Using these types of strategies can reduce tax liabilities and make the most of the operational profits.  A natural question would be “how does this work?”    

First, there is the method called cost segregation, which is the practice of identifying assets and their costs and classifying those assets for federal tax purposes. This can be useful for separating personal property assets from company assets, which as a result, can help to reduce the company’s tax reliabilities.     

To properly identify, classify and value real estate costs, tax consultants can dramatically increase business cash flow by uncovering personal property and land improvement costs that are eligible for accelerated depreciation.

Besides cost segregation, there are several other kinds of taxes that can be reduced.  Tax consulting can also help minimize the state and local taxes in addition to the gift tax.  An experienced tax advisor can use sophisticated planning techniques to minimize gift, income and generation-skipping taxes. As a business owner, consider taxes on personal property (machines, furniture, computers, and other non-real estate items) and real property (buildings, land, and other real estate) to be uncontrollable fixed costs.

Property tax is one of the largest operating expenses and many companies could be paying more property tax than is necessary.  If a business owns real estate or property, tax consulting can be used to analyze personal and real property to find assets that are no longer in use or exempt from taxation. The following tax minimization strategies can be used to garner up to a 20% savings on property taxes:      

Help to Save More Time   

Even the most successful entrepreneur is not an expert in taxation laws.  Tax consultants can help save time.  As a business owner, working on business development activities should be a top concern.  

Improve Your Business Strategy   

This may seem fairly obvious, but due to different kinds of federal and local taxes, varying industries and sizes of companies, not all businesses pay the same taxes. Therefore, the amount of taxes and tax rates will have an effect on a business and its decisions. Consulting with a skilled tax advisor can help to understand and figure out which taxes may not be necessary if a business meets certain requirements.  Tax consulting services can help anticipate tax changes and apply business strategies accordingly.  Some of the duties that business tax consultants can assist with for private companies include:   

• Performing detailed technical reviews of partnership, corporate, and individual federal tax returns and reviewing all related work papers.
• Coordinating with a company’s management for tax planning and compliance data gathering.
• Performing detailed review of income tax provisions in accordance with ASC 740.
• Researching federal tax legislation to assist in understanding the impact on compliance and consulting.
• Assisting with federal tax planning, restructuring, controversy, and accounting for income taxes.

Help Businesses in Various Industries  

Experienced tax advisors must face and find potential problem areas before they occur.  This way they can provide tax resolutions for different industries.  When a company opens up a new product line or different industry service, before doing so, it is advised that a consult with a tax consultant be done to learn about the critical tax policies of that particular industry.    

Avoid Tax Penalties

The state of taxes in the United States is quite complicated, especially with the new tax reform proposing many changes to the rules of deductions and tax credits.  Once a company or its accountant have failed to file tax forms before due dates or have incorrectly calculated the amount of any tax obligations, that company will be required to pay back taxes and assume a large tax penalty.  However, a tax consulting firm can help a business avoid the issues of wasted money on penalties to further develop the business.        

Conclusion    

In this shifting tax environment, both domestically and globally, presents different challenges and opportunities for companies going forward.   Tax consultants can work to help clients learn everything about their organization, understand its goals at the deepest level and uncover unexpected opportunities.