frequently asked questions on how
Shah & Associates CPAs PA
can help your business.
Want to find out more about Shah & Associates CPAs PA, such as how we work alongside business owners to pay the least amount of taxes legally and ethically while improve their business performance? The answers to these frequently asked questions and more can be found below.
Currently, most business owners are getting tax compliance but are not taking advantage of tax planning opportunities possible for them. In other words, you are currently providing tax documents to your CPA, he/she puts them in a software, they do a quality control check that the return is compliant with the IRS Tax Code and then tell you how much you “OWE”. This is tax compliance only.
Tax planning, on the other hand, is a process of looking at a person’s life, business and regulatory requirements to legally and ethically reduce taxes. It requires a tax planning expert to go through 60,000 to 70,000 pages of tax code to find every single strategy applicable to you and your business to find all tax savings opportunities possible without sacrificing tax compliance. Also, tax planning is done throughout the year and before the year ends while tax compliance is usually done after the end of the year. Generally speaking, 80% of tax planning strategies are applicable during the current year only. Once the year closes, it is not possible to implement these strategies for that year.
Most Likely No. Hiring a CPA is a lot like hiring a Doctor. For example, just because someone is a Family Physician does not necessarily mean they can perform a surgery. A Family Physician and a Surgeon are both Doctors but have very different skill set and expertise. Similarly, there are different CPAs. There are accountants who practice forensic accounting, business valuation, Tax Resolution, SEC work, Financial Statement Audits, IRS Audits, Personal Taxes Only, Tax Compliance, Tax Planning, Estate Taxation Only etc. Within the Tax arena, majority practice tax compliance.
Most likely a Tax Preparer does not have the skillset of tax planning even though they are a CPA. If you read your current agreement with your CPA, you’ll find that most of the agreements do not have anywhere in them that the CPA or Tax Accountant is obligated to find tax savings for you and your business. Their job is to prepare a tax return in compliance with Internal Revenue Code and tell you how much you “OWE”. Plus, your accountant is busy 50 to 60 hours a week (more during tax season) preparing client tax returns, doing audits, helping clients negotiate loans, answering client questions and a zillion other things. The only tax education most tax preparers get is their continuing education requirement to keep their license active.
Lastly, while becoming a CPA or EA, they do not teach tax planning. Yes, you read that right. The traditional CPA and EA courses are designed to train the professional towards tax compliance not tax planning. Tax planning is a specialized skillset and one has to invest tens of thousands dollars after getting their CPA license to learn the skillset. This is why this is a specialized skillset.
Well, there are a few different ways you can know this.
First, if you read your current agreement with your CPA, you’ll find that most the agreements do not have anywhere in them that the CPA or Tax Accountant is obligated to find tax savings for you and your business. The agreement will mostly state everything about preparing the tax returns in compliance with the tax code. This is the main reason why most business owners get an occasional advice from their CPA, mostly only after you’ll ask them.
Secondly, you only get any kind of tax advice when you ask for it. In other words, you are the one who has to do the research, find the strategies and then go to your accountant to see if that makes sense. While you are proactive with tax planning, your CPA is not.
Further, your CPA till date has never sat down with you and presented you with tax planning strategies, in writing, with the total amount of tax savings from them. Per tax law, a tax advice is not considered tax advice unless it is in writing. So, what is really happening in most cases is the CPA ends up giving oral advice, for which he or she is not taking any liability.
Lastly, your CPA or Tax Accountant does not meet with you on a quarterly basis to discuss what is happening with your business, how much income you are projected to make this year, your current year business and investment goals and recommending strategies, if applicable, throughout the year.
Tax Planning is not only about Tax Savings. If the goal was just to save taxes than giving away everything you have in Charity will save you ton of Taxes. However, it may not meet your business or investment goal. You may come back and say that yes I’d like to give some away in Charity but not all as I have a business to build and family to be raised. And that’s okay. This is why tax planning is not only about savings. It is more about aligning your business plan, investment plan and tax plan in such a way that you are able to achieve your business and investment plans with paying least amount of taxes legally and ethically. If you’re smart with business, investments and overall wealth, just aligning business plan, investment plan and tax plan with each other will increase your wealth 2X-3X over the next 5 to 10 years. This can mean early retirement or early financial freedom.
Yes. We can get you a no obligation tax savings estimate possible in your case. If we decide not to work together, at least you’ll know the amount of tax savings that was possible for your business.
It’s a similar process to how a Doctor comes up with his/her Diagnosis, how a Real Estate Investor estimates a house price and how a construction CEO estimates a job.
Well, there are about 400 of them and their infinite permutations and combinations. But just to summarize a few – we’ll be looking at ways to maximize deductions, legal entity structure, retirement planning, Insurance and Asset Protection, Tax Cuts & Jobs Act of 2018, Family First Coronavirus Response Act (FFCRA), Coronavirus Aid, Relief and Economic Security Act (CARES), Niche Specific Strategies, International, Asset and Gift Freeze, Tax Advantaged Wealth Management Strategies, Strategies around buying and selling a business, Strategies to minimize or eliminate Capital Gains and more…
No. Our job is to share opportunities possible for you and their pros and cons. It is completely up to you if you’d like to implement none, some, all or even phase them out over a period of time depending upon what makes most sense for you. We are here as a sounding board and to present you with options.
It depends on your size of the business, business future plans, investment plans, your individual goals and objectives with your business, your retirement plans, your exit plan from the business and so forth. Generally, we only work with clients where we feel there is an opportunity to save at least $15,000 on an annual basis. We have worked with clients whose tax savings were as low as $15,000 to as much as $899,000+ on an annual basis. These savings are not one time. Most of the savings are recurring on an annual basis.
No, when tax planning is done with bona fide purposes and good documentation it does not increase the likelihood of getting audited. Think of tax compliance and tax planning as a see-saw where most businesses are over compliant and paying high tax bill while not doing tax planning. Tax planning evens that see-saw optimizing the most tax savings while maintaining tax compliance at all time. Every single tax planning strategy we recommend comes with an Internal Revenue Code Citation so all of us are covered at all times. Having said that, there’s always a certain amount of audit risk regardless of whether you do or you do not do tax planning. Your audit risk can never be zero even if you’re not doing any tax planning.
Conservative, for sure. We believe tax planning at the slightest risk of being out of tax compliance is not in our or our client’s best interest. In fact, our firm policy is not to recommend any tax planning strategy that is a “listed transaction” with the Internal Revenue Service. A “listed transaction” is a transaction that is the same as or substantially similar to one of the types of transactions that the Internal Revenue Service (IRS) has determined to be a tax avoidance transaction and identified by notice, regulation or other form of published guidance as a listed transaction.
No. Because tax planning involves working in present as well as future and a lot may change. For example, you may end up starting another business, if your salary + net profit drops substantially, we may have another pandemic, tax laws may change or you may not decide to implement all the strategies we recommend immediately or may decide to phase them out depending upon your goals and objectives or many other things.
Our base tax planning fee is $4,400 and above.
First, that’s because you are currently paying only for tax preparation. Tax planning is an additional service requires effort, documentation, finding strategies with your business goals and objectives, implementing those strategies, meeting with you all year around, coordinating with third party specialists like attorneys etc., going through current tax laws and change in the tax laws so that you can pay the least amount of taxes legally and ethically.
Secondly, it is not nearly as high as the amount of taxes you’ve been overpaying by not doing tax planning. For example, if a tax plan costs you $7,000 but saves you $25,000, it’s worth the ROI.
Lastly, if you evaluate our tax planning fee with the amount of tax savings versus the amount of fee plus the amount of taxes you have to pay with your current accountant, there’s a substantial savings and return on investment here.
Sure. In fact, 9 out of our 10 tax planning clients wants us to help them with tax preparation as we were the one that have done tax planning and tax implementation for them. However, we can only work with a client on tax preparation if we are working with them on tax planning. As we are mainly a tax planning firm, we do not take on tax preparation projects without tax planning.
Client experience of working with our firm is extremely important to us. Once we start working together, you’ll get a live calendar link of the tax planner that will be assigned to you. You can communicate with them via email or via zoom calls. If you ever want to connect with them, you can click on your tax planner link provided to you and schedule a call at a day and time convenient for you and they’ll connect with you on a zoom call on that day and time.
Without judging any one of them, there are few different reasons:
- They are pro-active with their business and wealth. They do not wait till year end to find out what needs to be done and how much taxes needs to be paid.
- They are not looking for the cheapest accountant out there for their business. They understand the value of getting a good and sharp Tax Advisor and have paid top dollars for getting them on their team. They see them as assets and advisors that’ll help them get value and ROI than an expense to their business.
- They understand difference between income and wealth. Currently, income is taxed while there is no tax on wealth while it is building. They are strategic with their income and wealth building.
- They constantly measure what matters. i.e. They get regular Profit & Loss Statement from their businesses and are on top of where they stand during the year. Most Business Owners out there barely even know the amount of tax liability without looking at their return, when most likely that is their biggest expense on their Profit & Loss Statement. And we are not referring to the amount of taxes that were due at year end…we are referring to the actual tax liability for the entire year. They are 2 different things.
- They operate their businesses with a mindset of opportunity rather than with a mindset of scarcity and survival.
To conclude, the exact tax law is available to you and your business. The only difference is you need to act to work with a tax advisor that can help you achieve the same things. Building businesses, wealth and saving taxes will require active effort from you, the business owner. If you’re ready to put effort towards this, let’s get started. We promise to be with you every step of the way.