3 Ways Tax Accountants Help with Financial Advisory
Posted on: 4 June 2021
Most small business owners hire tax accountants when it is time to start preparing tax returns. Although tax preparation is a fundamental role for tax accountants, they do a lot more. For instance, a tax accountant can also play the role of a financial advisor, and there is no reason why you should not take advantage of their abilities. It is especially the case if you own a small business but want to expand operations. You cannot scale up without the help of a financial advisor. This article highlights various ways tax accountants play the role of the financial advisor.
Analysing a Business' Financial Status
For most business owners, everything about taxes ends after they submit returns. However, nothing could be further from the truth because tax preparation is only a small part of business accounting. For example, tax planning comes before tax preparation, with the former being a critical part of wealth creation. Notably, a tax accountant must analyse business operations against financial health before advising you on saving money.
For instance, if you recently donated money to a charitable organisation, a tax accountant can use it to your advantage. They will record the donations, file them as deductibles, and wait for a refund from the government. Most importantly, a comprehensive view and access to a business's financial status allows a tax accountant to implement strategies for lowering the tax bill.
Improve Investment Strategy
Business owners must make investment decisions from time to time. However, the strategies you implement when investing determine your returns. Most small business owners are not aware that every investment made must be tax-conscious. In this regard, tax-loss harvesting is a common and clever strategy that most small businesses use to maximise returns. For instance, if your business generates losses but you have a portfolio of active investments, you can be exempted from taxes on capital gains up to a certain amount. A tax accountant can carefully select investment opportunities that promise significant returns while minimising taxes.
Protect Accumulated Investment Returns
Superior investment performance is every financial advisor's dream, which is why most strive to outperform the market. Indeed, a financial advisor can identify lucrative investments guaranteeing significant returns annually. However, if you make a simple mistake in your taxes, you risk wiping out years of investment returns. For example, if you have been making $5,000 annually for three years but make a tax mistake attracting a $10,000 fine, you will feel the pinch. A full-time tax accountant will protect your investment returns by avoiding errors in tax reports.
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