Tax Preparation – Is a 2nd opinion worth it?
There are several advantages to filing your own tax return. If you’re not already, you’ll definitely become intimately aware of the financial details of the last year. You’ll know every number and have a sense of how things have gone. This can help as you shape your future business direction. You’ll also save the cost of preparing the return. And you’ll be able to do it on your timeframe, instead of having to wait until your tax preparer can get it ready.
But the downsides may far outweigh the advantages. Our firm routinely reviews tax returns for small business owners. It’s common for the tax liability to be over-stated by 40% to 60%. That’s money that could be in the business owner’s pocket to be used for business growth, or simply to cover the cost of living. No matter what it’s used for, it’s real money and it’s lost without the benefit of a 2nd opinion on the return.
Another significant drawback to not getting a second opinion is missing out on opportunities to improve the overall business structure. Small business owners are experts at their own business, but may not necessarily understand the importance of a proper business structure and its tax implications. The solutions are often simple to a trained eye, representing both substantial tax benefits and business advantages. But are routinely overlooked by the business owner because they lack the specialized tax knowledge. Properly structured, a business owner can substantially reduce their tax liability and audit risk while providing additional business protection and improving profitability.
And you don’t have to prepare your own taxes to become familiar with your financial information. Reviewing the information in detail and preparing summary sheets of income and expenses as part of the process of proving information for your tax professional can provide you the same benefit.
So a 2nd opinion may be worth far more than you realize. Choose a tax professional with both tax and business expertise and you’ll likely save yourself both time and money.
By: Evan A. Nielsen
Would you like a second opinion on your tax returns? Schedule your free tax consultation with Evan today by calling (480) 888-7111 or submitting a web request here.