We’re in an era in which more small businesses are launching like wildfire.
Recent studies showed that 17 million new small businesses were expected to launch in a single year. Small businesses are the backbone of the economy. But they’re often more tumultuous, have fewer resources, and are run by less experienced professionals.
If you run a business of any type, certain expenses are non-negotiable. Hiring a tax attorney is a great investment for several reasons.
This article will teach you the importance of working with a tax attorney to handle your business affairs.
1. They Can Assist You With Tax Audits
Roughly 4 out of every 1,000 tax returns get audited. While this number isn’t significantly high, there’s always a possibility that your return can be put under a magnifying glass.
If you get audited, you’ll need the assistance of a tax attorney. An attorney can provide protection during an audit so that you avoid penalties. They’ll help make corrections if necessary and speak on your behalf during the audit.
You’ll need the help of a lawyer to minimize damage post-audit so that it doesn’t hamper your business.
2. Tax Attorneys Provide Advice
Business tax returns are often complex, multi-faceted, and involve a lot of factors. A tax lawyer can help you through the entire year so that you’re not scrambling to file your business taxes when the deadline approaches.
They can help you organize your business taxes monthly and quarterly while keeping excellent records. Sound advice lets you run your business while knowing that your tax obligations are handled correctly.
3. You’ll Get Guidance for Any Businesses That You Run
Tax attorneys are also knowledgeable about business as a whole. Having a business-related attorney by your side will help you navigate challenges as your company expands and evolves.
Tax help aside, these lawyers also understand business as a whole. They understand the differences and nuances between sole proprietorships, partnerships, S-Corporations, and other types of companies. Tax lawyers work with businesses in various industries. These reference points can offer valuable guidance that can make you a more informed business owner.
Since 20% of new businesses fail within the first couple of years, and 45% in the first 5 years, it pays to get every edge that you can.
4. Attorneys Can Assist With Tax Prep Throughout the Year
Companies should also handle their estimated taxes diligently. These taxes are paid quarterly in January, May, June, and September. They’re due around the 15th of each month, depending on how the day of the week falls.
Paying estimated taxes is a vital piece of the puzzle for your company. You can be penalized for missing these deadlines or underpaying your estimated taxes. A tax lawyer will keep you on track with these payments.
They’ll also help manage your designations and bookkeeping throughout the year so that much of your tax return filing is a formality once the deadline arrives.
5. It Can Help You Pay the Right Type of Taxes
Business tax attorneys are vital because there are several different types of taxes that companies are responsible for. You don’t want to get behind with any of them because they will pile up and become more costly.
Examples of taxes that companies are responsible for include:
- Business income tax
- Payroll tax
- State taxes
- Employer taxes
- Real estate taxes
- Property taxes on business vehicles and equipment
- Self-employment taxes
- Excise taxes
- Estimated tax payments
As you can see, these taxes vary, and some may or may not apply to your business. Understanding things like sales tax in your state and how it is collected can make or break your company. Lawyers will help you know the correct and current rate. They’ll also help you put systems in place so that you’re not negligent about your handling of any of these taxes.
6. They Can Assist With Liens and Garnishments
Things like liens and garnishments can damage your business if not handled correctly. A tax lien is a hold placed on an asset in order to address a debt. If you owe back taxes, the Internal Revenue Service (IRS) can issue a lien. This can hamper your earning potential and hamstring your business.
Tax attorneys can dispute the lien or come up with a settlement or other resolution. Liens are particularly hurtful if they’re placed on your business real estate or other property.
Garnishments can also drain your business bank account. This is a type of lien that allows the IRS to collect what you owe out of your liquid funds. Addressing your debt with some sort of resolution will prevent a levy, which happens when the government seizes property. Working with a lawyer teaches you the difference between a garnishment and a levy and will understand how these circumstances can affect you.
7. You’ll Stay Up-to-Date on Tax Laws
Keep in mind that tax laws change from time to time and require you to stay up-to-date. This could come with significant changes, such as the tax rate in your industry or your tax bracket going up. It might also involve new write-offs or changes in your tax responsibility.
The best lawyers remain current with these tax law changes so that you’re prepared for your filing. This includes tax law changes on the state and federal level along with those that are specific to your industry.
8. Lawyers Can Review Your Documents
Having another set of eyes on all of your tax documents can be incredibly helpful to your business. This will minimize errors and make sure that all sections are completed correctly and in full.
Making mistakes on your tax filings can get them sent back, costing you more valuable time and money. The IRS has been backed up for the past few years and the events of 2020 exacerbated it. So if you have mistakes on your tax documents, you can expect significant delays that can put your company further behind the eight ball. Tax attorneys not only have a skillful eye that they can look over your documents with, but they also have software platforms they can use to run a scan for any and all mistakes. These checks and balances work in your favor and will help you be diligent about the way that your business is handled.
9. Getting Help Saves Money
Some companies balk at hiring a tax attorney because they don’t want to pay the money. The fact of the matter is that you’ll save more money as a whole by hiring an attorney. Their ability to cut out your mistakes, find deductions, protect you against audits, and overall handle your taxes correctly saves money in the long run.
You’re more likely to commit costly errors when you do your taxes yourself. Unless you’re an expert, you’re going to be playing catch up and will have a learning curve. This alone makes your taxes take more time, which costs you money since you’re taking your focus away from your primary areas of business. It’s best to make the investment in a lawyer upfront and know that your taxes are handled correctly.
10. You Owe Back Taxes
It’s integral that you hire a lawyer if you owe any back taxes. A tax attorney can help you satisfy the balance or find a settlement for much less.
There are many options in play when you owe back taxes. You may choose to enter an installment agreement to pay it down little by little. You may also be eligible for an offer in compromise (OIC) which can help you settle the account for a fraction of what you originally owed. An attorney can not only be an advocate for you, but they can also provide counseling resources so that you know what you are facing and which options are best. You may seek currently not collectible (CNC) status to help you catch up on your taxes as well.
It’s best to tackle your back taxes aggressively, rather than allowing them to add up. This is the kind of issue that can hamper your business if you’re not diligent about it. Reach out to attorneys that are skilled at these arrangements so that you can get the best possible outcome.
11. You Have Unfiled Tax Returns
You will also need the assistance of a lawyer if you have any previous years tax returns that have gone unfiled. In many cases, you can’t file these taxes with software anymore and must file paper returns because it has been too long. A lawyer can process your unfiled tax returns for you and get them on the record to make sure that you are up-to-date in your filings.
This is an essential piece of the puzzle before you can enter into an offer in compromise or reach a settlement agreement.
In most cases, there are reasons that your previous year’s taxes have gone unfiled. Tax relief attorneys can do it in an organized and expert way to prevent mistakes and get you back on track. They can also help you with any problems that led to you not filing previous year’s returns.
12. They Provide Attorney-Client Privilege
It’s also helpful to hire a lawyer because any conversations or information shared are confidential. This is the benefit of attorney-client privilege and will prevent you from incriminating yourself.
Tax problems can come with significant penalties that a lawyer can protect you from. You will appreciate being able to speak openly with them and have them look through your books without the worry of opening yourself up to bigger issues.
13. Lawyers Can Help Start a New Business
Tax lawyers are useful for far more than just filings and audits. They understand how different business designations have different tax obligations. Their expertise is essential if you’re starting a new business. In fact, tax classification is often one of the biggest variables that business owners consider when opening a new company.
Having this insight from the very beginning through the help of an attorney will make sure that you choose the most ideal business designation. They can help you with your company’s initial filing and answer any questions that you have along the way. Having this advice upfront will help you prevent errors that will set your company back before it even gets started.
14. You’ll Take More Deductions
Finally, tax attorneys are helpful because they can help you lower your tax bill. They will comb through your taxes and make sure that you are taking every possible deduction. There may be many deductions you weren’t aware you were eligible for. Having an expert by your side keeps you up to date with new and temporary deductions that change from time to time.
Growing your income and reducing your tax burden is an essential part of business. When you have a tax attorney by your side, you’ll stay on top of this every step of the way. It can help you grow your profit margins and make sure that your company thrives for the foreseeable future.
Find a Credible Tax Attorney to Assist You
Working with a tax attorney can make a world of difference for your company. Whether you’re a sole proprietor or a CEO, you’ll want the assistance of a quality pro. Begin with the points above so that you have no problem getting the tax help that you need from seasoned professionals.
We’re the tax firm that you need to turn to once you’re ready for assistance.
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