bookmark_borderTax And Tax Planning

Finding a CPA for tax-planning purposes

I’m writing to you to find out if you know where I could go or who I could consult with regarding how the IRS would interpret a particular capital gains issue. I act as power of attorney for my mother, who has late-stage Alzheimer’s. She is income-poor and holds a considerable amount in stocks with a very low cost basis. I’m hoping I can sell these stocks and generate cash to take care of her without incurring a big tax liability. Thank you for your consideration.

You should consider seeking out a certified public accountant, or CPA, who can help you figure out the most tax-efficient way to get the funds you need for your mother’s care.

If you have never used a CPA before, you could ask for referrals from family, friends and even the stockbroker who handles your mother’s stocks, if that is the case. Additionally, many CPAs are members of their local chamber of commerce, and you can use that as a resource.

You should be prepared to discuss your mother’s entire financial picture, including not only her income sources such as Social Security, stock dividends and interest, but also all of her financial requirements for the care she needs at this time of her life. You will also need to know what other assets she owns besides the stocks, such as her home.

Ask the adviser

To ask a question on Tax Talk, go to the “Ask the Experts” page and select “Taxes” as the topic. Read more Tax Talk columns. To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Taxpayers should seek professional advice based on their particular circumstances.

Importance and Benefits of Tax Planning

Tax planning should be an integral part of your finances. It’s your loss if you don’t make use of the available deductions and exemptions to save on taxes. Paying taxes is a way of contributing to the nation’s development, but when the government is providing you with options to save taxes, it is only wise to do so.

Importance of Saving Taxes:

Let’s understand tax planning and its benefits with the help of an example. Consider Akash, an IT professional living in a metro city with annual compensation of Rs 16 lakh. He is currently repaying an education loan of Rs 22 lakh which he had availed to fund his higher education

How to Save Taxes?

The Income Tax Act, 1961, provides taxpayers with several options to reduce their tax payable. Various sections offer tax deductions, out of which Section 80C is the most popular. Amongst exemption, claiming house rent allowance (HRA) is the widely used exemption. The best way to save taxes is to lay out a financial plan as and when there is a revision in your salary and to stick to it. Also, it is essential that you make tax-saving investments in the first half of the financial year, so that you don’t make hasty investment decisions at the end of the year. Furthermore, it would help if you claimed all the exemptions and deductions you are eligible for. To do this, you should know and understand the various exemptions and deductions available.

Section 80C

Section 80C is the most popular section in the Income Tax Act, 1961. It provides provisions for taxpayers to save up to Rs 46,800 a year in taxes. Section 80C covers several tax-saving investment options, and investors can choose to invest in any of the options under Section 80C to avail the deduction of up to Rs 46,800 a year. The best tax-saving option under Section 80C is equity-linked savings scheme (ELSS). It is an equity-oriented mutual fund scheme, offering the dual benefit of tax-saving and wealth growth

Apart from ELSS, you can invest in government savings schemes such as Public Provident Fund (PPF), National Savings Certificate (NSC), tax-saving FDs, and so on. Cumulative investments in these options will provide deductions of up to Rs 1.5 lakh. You can also claim deductions towards your payments made towards children’s school tuition fee and home loan principal repayment under Section 80C.

What Can You Expect From a Career in Tax?

Though you probably won’t help imprison gangsters like Al Capone for income tax evasion, as a tax expert you’ll certainly hunt down creative solutions to surprising problems. Here’s a look at the tax careers out there and what you’d do in a day at the office.

Tax at a glance

Tax is an unavoidable fact of life – it affects every person, company and organisation. Everyone wants to save money on their tax bill. Everybody wishes someone would do the paperwork for them.

What roles are there in tax?

A tax role has two main parts: compliance and consultancy.

Compliance is the nitty gritty of tax – the paperwork. One key compliance job is to complete your client’s tax return according to the current regulations and file it on time. Depending on your specialism, you might do calculations, accounting and paperwork for things like setting up family trusts or estate planning. At the beginning of your career you can expect to focus on compliance while you learn the ropes.

Tax consultancy is the problem-solving side of the tax business. Tax advisors make sure their clients’ finances are tax-efficient (simply put, they find ways for their clients to pay the minimum tax possible). It means knowing tax regulations inside out and being able to take advantage of all the available tax structures, tax breaks and loopholes. This is what you’ll focus on as a qualified tax advisor.

How to Hire a Tax Professional for Your Small Business

Hiring the right tax professional for your small business is important. Getting good tax help can translate into money for your business. Ideally, you should form a long-term relationship with a tax professional so you have someone to call year-round. Because this person is so important to your business’ bottom line — and will help ease your stress throughout the year — take the time to learn about the different types of tax pros, how they can help, and how to choose one.

Types of Tax Advisers

Anyone can claim to be a tax expert. And people who prepare tax returns don’t have to be licensed by the IRS

Make sure your tax preparer is one of the following:

Enrolled agent (EA). An EA is licensed by the IRS. The EA has either passed a difficult test or has at least five years of experience working for the IRS. Enrolled agents are the least expensive of the tax pros and often offer bookkeeping and accounting assistance.

Certified public accountant (CPA) and other accountants. CPAs are licensed and regulated by each state. They perform sophisticated accounting and business-related tax work and prepare tax returns. Larger businesses or businesses with complex business tax returns often need CPAs. The larger CPA firms are expensive. Smaller CPA firms are cheaper and may be better for the typical small business.

Tax attorney. Tax attorneys are lawyers with a special tax law degree (called an L.L.M. in taxation) or a tax specialization certification from a state bar association. Tax attorneys can be expensive. But you should consult one if you have a tax problem, are in trouble with the IRS, need legal representation in court, or need business and estate planning.

Whatever type of professional your business needs, make sure he or she has specific knowledge and experience in helping small businesses. It’s even better if you can find someone who already knows a good deal about your type of business or industry.

How Tax Pros Can Help Your Business

If you find a good tax professional, you seek his or her assistance in many ways throughout the year.

simple tax

We’re not your normal suit and tie kind of CPA’s. We don’t want to just see you once a year when we do your taxes. We actually want to have a relationship with you and we want to help you plan for your future. We specialize in tax returns and tax planning with the goal of “no surprises”. You shouldn’t ever be surprised by a big tax bill or an issue with the IRS.

Rely on your go-to tax consultants to make things less taxing

If there’s something that every American knows about the IRS, it’s that it is too daunting to deal with. All those calculations, exemptions, and deductions can drive you crazy even if you’re aware of when and what forms need to be filed. The good news is that you no longer have to do taxes on your own. You can now benefit from the best tax preparation services offered by dime simple business, the only company that can make the process completely stress-free for you. We are driven by the idea that complex things can be turned into simple things, and we’ll prove that.

Meet your team of seasoned tax accountants in Alpharetta, GA who are looking forward to helping your non-profit, business, or church move forward. We will prevent your organization’s financial future from taking a beating by preparing long-term forecasts, filing your returns, and developing cost-effective strategies. We will stand behind you when dealing with the IRS and keeping up with the ever-changing tax code while looking after your interests as a taxpayer.

Long-standing business relationships. When working side by side with dime simple business, you’ll always have a team of experts at your service, no matter the issue. We are not like those “specialists” who only show up before the deadline to file your tax return and then disappear for months. We are here day and night to help your organization thrive and secure its financial future.

Invaluable assistance for all. Regardless of what type of organization you’re managing – a small business or a church – we can make sure you’ll never be landed with a huge tax bill. Our capabilities allow us to protect the interests of all while providing hassle-free tax return services and more.

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How to choose the right accountant

Top tips for choosing an accountant

Once you’ve decided it’s time to hire an accountant, the next step is to choose which accountant to hire. It’s important to take the time to do this carefully, and there are a few things you’ll want to consider first. You’ll need to think about issues such as the accountant’s location, the division of workload and the type of accounting software you’ll use. Consider how much you’ll have to pay the accountant, and whether they can help to reduce your business taxes.

Ask yourself if location matters

It used to be important to have your company’s accountant located nearby. But today, more companies are collaborating online, using cloud-based technology to manage their business. This means that location is less of an issue. With cloud accounting, you and your accountant can view identical real-time data at the same time – no matter where you are.

Choose a certified or chartered accountant

In many countries, accountants are regulated by professional bodies which look after accounting qualifications and try to maintain high professional standards. Depending on the country you’re in, professional accountants may be called Certified Public Accountants or Chartered Accountants. Chartered Accountants (CAs) are highly qualified professionals who have completed degree-level study along with workplace experience and a professional competence program.

Tips to Choose an Accountant for Your Small Business

Know What You Need

But before you choose an accountant, you need first to understand the kind of work or responsibilities you want the accountant to handle for your business. If you need monthly financial statements and bookkeeping tasks, a non-certified accountant or bookkeeper can be hired. But to get tax planning advice, tax returns prepared, or audited financial statements, you need a CPA or certified public accountant.

Look For Small Business Experience

Beware of big accounting firms. You need someone who works with small businesses, and it could also be a bonus if the accountant works with businesses in your industry. While working for clients from a specific industry for a long time, some accountants get to know the related challenges very well. If the accountant has been dealing with several clients like you, he/she can guide you well about making the right financial decisions for the growth of your company.

Decide Whether You Need an Accountant or a CPA Firm

Many small business owners start by managing their taxes on their own. Unlike the past, it has become much easier for business owners to do simple bookkeeping tasks with the help of advanced software like QuickBooks, Xero, Sage, and similar others.

Choosing the Right Accountant for Your Business

Choosing the Right Accountant: Hiring a Firm Versus an Inside Accountant

Many entrepreneurs who launch their own businesses start out by wearing the accountant’s hat and doing your own taxes, in addition to doing just about everything else in the business, too. It’s become easier for a layperson to keep track of a business’ finance with the advent of simple bookkeeping software, such as QuickBooks, Quicken, and Microsoft Office Small Business Accounting. But there comes a time in a growing enterprise when it makes sense to hand over responsibilities for taxes, accounting, and the rest of the financial functions to specialists.

Choosing the Right Accountant: When Is It Time?

Many small businesses don’t have the volume of financial transactions that necessitate hiring a full-time — or even part-time — bookkeeper or accountant on staff. Then again, the financial situation of their business is such that they could benefit from more regular financial review and planning and up-to-date accounting — instead of leaving every invoice, receipt, and ledger to hand off to the tax preparer at the close of the fiscal year.

Inside accountant

When the business grows in revenue and the transactions become more complicated, it is time to consider hiring a full- or part-time inside accountant. Since the outside accountant’s fee grows with the size of the business, the owner may see some cost savings by bringing some of the work in-house.

How to Choose an Accountant Who Is Also an Advisor

Personality

Is the accountant’s style compatible with yours? Be sure the people you are meeting with are the same ones who will be handling your business. At many accounting firms, some partners handle sales and new business, then pass the actual account work on to others.

Fees

Ask about fees upfront. Most accounting firms charge by the hour; fees can range from $100 to $275 per hour. However, there are some accountants who work on a monthly retainer. Figure out what services you are likely to need and which option will be more cost-effective for you. Get a range of quotes from different accountants.

How to choose an accountant for your small business

Why should I hire you?

Hiring an accountant can be “even more important” than taking on a member of staff, says Clive Lewis, head of enterprise at The Institute of Chartered Accountants in England and Wales (ICAEW). “If you get the wrong person, you can miss out on things you should know,” he explains, “and that can be very costly.”

Could my money work harder?

James Richardson is a company director at Metric, an accountancy firm specialising in start-ups. He says most people believe an accountant will just be looking after annual accounts and tax compliance. However, “that’s only a small portion of what a good accountant can – and should – be doing for you.”

Are we a good match?

The right accountant will have more than just prestige – it’s important they understand small business needs, and are able to offer relevant insight.