Tax Strategies: Helping your Business Save Money
Taxes are a necessary part of doing business, but that doesn't mean you have to overpay. A good tax strategy can help you save money on your taxes and improve your bottom line.
At Pennywise Tax Strategies, we understand the unique tax challenges faced by businesses of all sizes. We work with our clients to develop customized tax strategies that help them minimize their tax liability and maximize their profits.
Here are just a few of the benefits of working with Pennywise Tax Strategies:
- Reduce your tax liability: We can help you identify all of the available tax deductions and credits that you may be eligible for. This can help you reduce your taxable income and save money on your taxes.
- Improve your cash flow: By paying less in taxes, you'll have more cash flow to invest in your business and grow your bottom line.
- Avoid costly tax penalties: We can help you stay compliant with all of the latest tax laws and regulations. This can help you avoid costly tax penalties and interest charges.
- Peace of mind: Working with a qualified tax professional can give you peace of mind knowing that your taxes are being prepared accurately and on time.
If you're serious about saving money on your taxes, contact Pennywise Tax Strategies today. We offer a free consultation to discuss your tax needs and how we can help you achieve your financial goals.
Our Process
When we start working with you, it’s likely we will see some opportunities for immediate savings. However, given the intricacies of the tax code, implementing one strategy may preclude you from taking advantage of others. On the other hand, making one decision may open up the playbook for dozens of other tax savings opportunities.
During the initial meeting with the team, we start gathering information. We want to know your story, your hopes, your dreams, your aspirations, and maybe even some of your complaints. We gather information (like prior tax returns, financial statements, and a copy of your business plan if you have one).
Based on that abundance of information, we start piecing together a plan. This usually takes a couple of meetings with us, as we combine so many moving parts. But in the end, you have a roadmap of strategies you can implement to keep more of your hard-earned money.
At that point, most of our clients decide to continue working with us. That’s where the real fun begins (well, as fun as taxes can be). We begin implementing your plan, creating the documentation, and managing your tax bill immediately. Like all plans, we probably need to pivot and adjust throughout the year as circumstances change.
We go along with you on that journey. Often, we need to work with other experts. You may want us to meet with your financial advisor. Maybe we need to introduce you to someone who can implement your captive insurance company, or do a cost segregation study on your real estate investments. We make sure you are in good hands throughout the year, so that you are maximizing your savings (while staying out of trouble).
Typically, we meet with our clients on a monthly basis to answer their questions, talk about new strategies, and check in on how things are going. When a new opportunity presents itself, or when significant changes are occurring, we are available to be your trusted advisor.
Our goal is for you to understand what your tax bill looks like by December 31st, not April 15th (or whatever extension deadline you have).
In essence, we systemize our relationship. We work along with you, meeting frequently, being proactive, and high-fiving on April 15th, rather than shedding tears.
The Cost of Tax Strategy vs. The Cost of Failing to Plan
The average business owner pays their tax preparer between $1,000 and $5,000 per year to file taxes (and, if we’re being honest, we prefer to work with above-average business owners). If you’re paying your preparer $3,500, but you have a $75,000 tax bill to go along with it, what is that service really costing you?
On the other hand, if you paid your tax strategist (who also does your tax prep and filing) 10 times the fee, but they cut your bill in half (or completely eliminated it), wouldn’t you be better off?
So we know what you’re going to ask - how much will this cost me, and how much can you save me?
You’re such a typical impatient entrepreneur, but don’t worry. We got you.
Here’s how this typically works. You schedule a call with us. We learn a little bit about your business, and your current tax situation. We quote you a fee to prepare the tax plan. If we can’t save you at least what you paid us, we’ll refund your money.
THEN, if you decide to keep working with us after you get your plan (which 80% of our clients choose to do), we can quote you a price that’s tailored to your specific business and situation. Sometimes these things get complex; sometimes it’s more straightforward. Wouldn’t you like to pay accordingly?
Not all accountants are the same
When we have the opportunity to speak to groups of entrepreneurs, the phones come out, and the pictures get snapped of a slide where we outline the different types of accountants.
Educating business owners to the different roles that accountants serve has become extremely valuable. Once business owners learn how different accountants can work with their business, their eyes are opened to possibilities.
Every book on starting a business says you should hire a good accountant and a good lawyer. When your business is new and/or small, you may have one person filling more than one of these accounting roles, but as your company grows, and your profits grow as well, it’s time for your team to start specializing.
What follows is a description of the different types of accountants, and how they can serve your business.
Bookkeeper
Role: Maintains accurate records of financial transactions. They typically enter your transactions into quickbooks, and categories the various types of revenue and expenses.
Responsibilities:
- Records income, expenses, and other financial data.
- Prepares financial reports like profit and loss statements.
- Reconciles bank accounts.
Focus: Day-to-day financial tracking.
Importance: without good bookkeeping, you cannot run a successful business. You cannot make good decisions (consistently), or even rely on the accuracy of your tax returns and financial statements without a competent bookkeeper.
Payroll Company
Role: Handles employee payroll and related compliance tasks.
Responsibilities:
- Processes employee paychecks and direct deposits.
- Manages tax withholdings, benefits deductions, and employer contributions.
- Files payroll tax reports and ensures compliance with labor laws.
Focus: Paying employees accurately and on time while ensuring compliance.
Importance: ensuring your employees (and often your vendors) are paid on time, in the correct amounts. Filing your payroll tax returns, and remitting the correct amounts to the various taxing authorities. Fortunately, this is a simple task for your business to outsource so you can focus on activities that add more value to your business.
Financial Accountant
Role: Prepares financial statements for internal or external use. This role has a historical focus, with an emphasis on accurately reporting what has happened in the past.
Responsibilities:
- Creates balance sheets, income statements, and cash flow statements.
- Ensures compliance with accounting standards (e.g., GAAP or IFRS).
- Prepares reports for investors, lenders, or regulatory agencies.
Focus: Historical financial performance and compliance.
Importance: the financial accountant will generate reports that are populated by the bookkeeper. If you go to a bank, or look for investors, they will want to see financial statements.
Managerial Accountant
Role: Provides financial insights for internal decision-making. Titles typically include Controller or CFO.
Responsibilities:
- Analyzes financial data to guide budgeting and forecasting.
- Tracks performance metrics and identifies cost-saving opportunities.
- Supports strategic planning and operational decisions.
Focus: Improving business efficiency and profitability.
Importance: Assisting the owner with making data-driven decisions, and making projections for the business.
Tax Preparer
Role: Prepares and files tax returns.
Responsibilities:
- Completes tax forms for individuals or businesses.
- Ensures compliance with tax laws and regulations.
- Typically utilize software to simplify the filing and reporting process.
Focus: Filing accurate tax returns with the required authorities such as state, federal, and local.
Importance: Accurate and timely tax returns help you avoid penalties, interest, and potential jail time.
Tax Strategist
Role: Develops long-term strategies to minimize tax liability.
Responsibilities:
- Analyzes tax laws and business structures for optimization.
- Plans transactions to maximize tax benefits (e.g., entity structuring, retirement planning).
- Guides clients in proactive tax-saving measures throughout the year.
- Generate documentation as evidence of tax positions.
Focus: Strategic planning to reduce taxes over time.
Importance: Help you keep more of your hard-earned money.
Summary of Key Differences
- Scope: Bookkeepers and payroll companies focus on routine tasks; accountants analyze or report financial data; tax professionals focus on compliance or strategy.
- Timeframe: Financial accountants focus on the past; managerial accountants and tax strategists focus on the future.
- Impact: Tax preparers ensure compliance; tax strategists proactively reduce liabilities.