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  • Writer's pictureJayson M. Thornton, CFP

Tax Advisors Explained

A Tax Advisor is someone who has the experience and credentials to help you with taxes; personal, and business. A tax adavior is more than just a tax preparer.

Why you need a Tax Advisor

If you don't have a tax advisor you trust to help you with your business taxes, it's never too late to start looking. Having a good tax advisor can mean:

Saving money at tax time. Not having to pull out the records and do it yourself (and that's about as painful as going to the dentist!) and, having someone who can help if you get audited.

What is a Tax Advisor

A tax advisor is a financial expert with training in tax laws. A tax advisor should be up to date on current tax regulations, which change every year.

Tax advisors are regulated by the IRS, under Treasury Department Circular 230, which also determines the types of professionals who may practice before the IRS. Included in this list are Attorneys and Accountants (CPAs & EAs)

What does a Tax Advisor do?

A tax advisor can help you with your business taxes - before, during, and after tax preparation:

Before Tax Preparation: A professional tax advisor can give you advice on tax planning, but tax planning isn't done just before the end of the year; it continues throughout the year.

You should be talking to your tax pro at strategic points during the year - every quarter, at a minimum - to discuss strategies for minimizing your taxes (legitimately, of course - avoiding, not evading).

During Tax Preparation: Your tax advisor most probably will also be your tax preparer, doing the work of preparing your business tax return and your personal tax return. If you pay business taxes through your personal tax return, the same person should be doing both returns so you can coordinate tax savings. For example, a loss on your small business taxes (through Schedule C) can be applied to your personal tax bill to lower your overall taxes. And lower business income means lower self-employment taxes, which you must pay personally along with income taxes.

After Tax Preparation: When your tax return is filed, there may still be work for your tax accountant to do if you get audited. It makes sense to have your tax preparer be the person you turn to for help if you get a letter from the IRS saying you are being audited. This person should have the standing to be able to represent you before the IRS during an audit. IRS-regulated tax professionals (attorneys, CPAs, Enrolled Agents) can go with you to an IRS audit or represent you at the audit.

For more information contact Accountant Jayson M. Thornton (314) 394-8588

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