The late year end evaluation of year to date profit and loss of the business entity together with the related individual owner(s) personal income tax circumstances. After gathering the information the year to date numbers are evaluated for accuracy. Upon completion of corrections, and together with year to date payroll numbers and investment income a sophisticated computer model of the projected year end tax return is prepared. Using the estimated result, the circumstances are planned to provide the most appropriate combination of corporate income and personal income to maximize tax savings by using suggested changes in salary, withholding, estimated tax payments, inter-company transactions, and prepayments or deferred payments of tax deductible items. Such planning is then communicated to the client with ample time to make needed changes in circumstances to achieve the desired result.
Includes an overall review of the client’s business and personal tax structure to evaluate the best types of entity that should be used for tax purposes for current operations and future exit strategies, the cost effectiveness of pension plans, the potential for various tax credits, the evaluation of inter-company rental and loan arrangements, the evaluation of tax free investments, the evaluation of tax accounting methods, and planning to minimize or eliminate the alternative minimum tax are some of the items considered.
The prevention of underpayment penalties and maximization of tax deductions are the result of periodic review of year to date income and taxes paid. This is done between once and four times each year and at clients request.
Very often the long range strategy of a business owner is the ultimate expansion and then sale of the business. This may involve the acquisition of other business along the way and then the ultimate sale. We believe that the business owner should be instrumental in the negotiation and completion of these significant transactions. We believe the attorneys should document the agreement and we as accountants should consult and tax plan.
Our involvement and services become very crucial before any potential deal starts to be negotiated. It is at that time that we can advise our Long Island clients how and what he should plan on selling (assets versus stock or equity interest). At the letter of intent stage of such transactions, our services become even more crucial since the intent of the parties starts to take a written form. We read the agreement and using our many years of experience point out trouble spots from a business and tax point of view, having been involved in many transactions over the years. We then take the letter of intent and do a mock financial statement and tax return, incorporating the terms and mechanics in the agreement. This interpretation of the agreement raises questions and issues, which when presented to the principals and lawyers along with potential solutions, allows them to reconsider, solve problems, and bring final resolution to the agreement.