14 Situations To Call Your Accountant For Tax Planning

By on December 18, 2016

No matter how big your profits or losses for the year are, you will be hiring accountants to file your tax returns when the time comes. Whether you use a general full-time book keeper or a proper CPA depends on your level of complexity within your accounts.

Careful legitimate tax planning is a hallmark of great investors. Why pay more tax, or any at all, if you can legitimately minimize this expense via exploiting proper loopholes that were conceptualized for exactly this purpose?

If you are not thinking deep enough. Or not getting professional help in doing your taxes, you could be leaving a lot on the table.

Just think about it. Even delaying taxes by rolling over or retaining profits could very well help you take on more projects within a financial year.

A lot of real estate investors leave making contact with their accountants at the financial year end. The logic is that accountants can do a good job just as well when documents for the full year are available. But this also means that what and how you have conducted your business is already engraved in stone.

ONE simple mistake in the paperwork can mean your disqualification from certain tax rebates. And sometimes, the size of these rebates can make the fees of an accountant look negligible.

If every medium-to-high level financial decision is made with the advice of a CPA, you can ensure that they are properly documented so that you will be eligible for the loopholes available come the time for filing your taxes.

Here are various situations where you should at least make a courtesy call to your accountant for professional advice.

1) Before buying property

The key item here is depreciation and how much cash flow it can free up for you.

Depreciation dominates the realm of real estate accounting. And it would be a huge miscalculation if you have allowed this slip your mind.

2) Before selling property

Are the profits from a sale classified as capital gains or operating profits? Are they taxable? And how much?

How the cash inflow is classified and how lower tax bracket classifications are justified can mean as much as a third of the actual profits.

A CPA does not seem so expensive now does it?

3) Buying and selling a business

If you follow the action in Wall Street, you might have noticed that sometimes seemingly loss making businesses can shock the market with record profits at the financial year end.

One of the major reasons comes in the form of acquisitions and mergers.

This allows loss making operations to beef up it’s financials by integrating financials of acquired businesses into their own Profit & Loss statements and balance sheets. You might then find it an outrage when you realize that funds for these acquisitions are often made with share issues.

But that’s a story for another day.

The point I’m making that that if you are buying or selling a business, it will have a significant impact on your financial statements. And that inevitably leads to tax issues to resolve.

4) Mortgage refinancing

This can be a major factor for lenders to determine whether to refinance, and what kind of rate and terms to offer.

It is especially applicable when you are operating under a business rather than an individual. Because when that is the case, the business profitability comes into the picture for credit assessment.

5) Banking facilities

Since mortgages were mentioned, make a note that banking facilities like Letter of Credits, factoring, trade financing, etc, are all determined by the financials of your business.

If acquiring these credit facilities is in your planning pipeline, make sure to inform your accountant so that he can advice and alert you accordingly.

6) Buying vehicles

From time to time, the government offer incentives and write-offs for certain car models and makes.

And the odds are that you won’t know about them until you give your accountant a call. No point forgoing a tax benefit when you are fully eligible for one.

7) Business trips

Do your vacations qualify as business expense?

You might actually have a case when you are actually doing business on your trips to Hawaii.

8) Children

This might sound odd. Few people talk about this… probably because they are afraid that others not exploiting these might make a fuss… causing these tax breaks to be terminated.

But in some countries, having more children can have great tax benefits.

I know for a fact of people who declares an income of up to $300,000 yet pay no taxes. The catch? They have as many as 4 children/babies who have yet to reach their teenage years.

9) Divorce

The second professional to see in divorce is an accountant. After the lawyer.

It is no understatement to say that financial matters can be a real mess in divorce. You’d be a fool not to get the advice from a trusty accountant.

10) Buying insurance

Insurance money are generally tax-free. And some types of expenses associated with insurance can be tax-deductible.

A qualified accountant should have the lowdown on how to take advantage of these tax policies.

11) New entity to take on a new business

Most people probably know about the different between doing business as a proprietor and a private company with limited liabilities.

Yet that is just scratching the surface of this playbook.

It is best to seek the advice of your accountant to determine what type of entity to use in conducting operations of a new business.

A mistake can have huge implications in terms of tax planning.

12) Closing a company

If you have ever made the tough decision of closing a company, you’d know of the many administrative tasks to undertake in order to dissolve it properly.

Sometimes it might actually be cheaper to close a company later than immediately. These scenarios can be complicated. But it’s nothing that a CPA will have problems in enlightening you about.

13) Changing property ownership

Should you hold the title of a property as an individual or let your company be it’s owner? Or should you even consider incorporating a new company to own that property?

As you might expect this decision can have grave tax implications when you get it wrong.

Transfers of ownership can have even more factors to consider. Do get some professional advice before moving forward.

14) Donations to charity

Donations almost always come with tax breaks. It’s just a small gesture of reward and appreciation from the authorities when you make contributions to a charitable cause.

You’d be a fool not to enforce these tax breaks and rebates.



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