Tax Services by Accounting CPA and Accountant in Scottsdale, AZ

TAX SAVINGS IS WORTH YOUR TIME!

 

By Jeffrey Brooks, CPA, CFP, MBA for JBrooks Wealth Advisors, PC, a Professional CPA and CFP Firm  jeff@jbrookswa.com  602-292-2009  Please consult with your professional tax CPA regarding your specific circumstances!

 

 

 

COMMITMENT FROM  YOU IS REQUIRED TO KEEP MORE OF THE MONEY YOU MAKE!I do have clients who do not need tax planning because they do not make very much money and their taxes are minimal.  Our time working together with these clients is minimal. Their fees are lower because all we do is prepare their business and personal tax returns.

 

But for those of us who are making a lot of money and paying a lot of taxes, working on reducing their taxes should be one of the top priorities.

 

The fact is that  only a very small percentage of us can retire comfortably  while living within the spending  level that we are used to.

 

Louise and Looie Loser are decent individuals who are always putting out fires.

 

It is hard for me to understand how they are willing to pay too much in taxes without changing their time management habits to work on reducing their taxes.

 

I think part of the blame needs to be put on CPAs who are just tax preparers who never offered tax reduction services.

 

I think another part of the blame is with TV and internet commercials that show a taxpayer or his advisor just pushing a button and taxes just drop dramatically within just 10 seconds.  No mention that the profit and loss is wrong if there are mistakes in the revenue and expense accounts and/or mistakes in the balance sheet assets, liabilities and equity accounts.

 

No effort required , no need for a CPA tax professional, all you have to do is push a button.

 

However, if business owners work with a CPA tax specialist who has guided thousands of clients from incorrect taxable income and tax owed to materially correct taxable income and lower tax owed or refund, the business owner will see that it took some effort but it was worth the effort.

 

A business that has high cash flow coming “in the front door” but then high tax going “out the back door” is like a homeowner that pays too much for air conditioning or heat because the windows and doors are always open.   The high tax that business owners’ pay did not just happen but each day and week of the year it grew like a malignant cancerous tumor!

 

Recently I spoke with a prospect who reminded me of Louise and Looie Loser.

 

The prospect was complaining to me that he had to pay too much in income taxes and how his CPA was not responsive and did not help him pay less tax.

 

 

However, after spending about 1 hour speaking with the prospect, reviewing his business and personal tax returns which were riddled with  errors resulting in overpayment of tax, he could never find the time to work with me to reduce his takes. We are talking about over a $40,000 refund on amended tax returns but the urgencies of day to day resulted in never getting us what we needed.

 

The new client could never find the time to get us what we needed nor answer our questions.

 

The new client did not have to take the time to learn, to ask questions and to get us information and answers to our questions.

 

We are not just talking about one time return on investment of 8 to 1, there would be tax savings EACH year for the rest of his working life as a business owner!

 

So even when I find a “need”, the problem is that a majority of  business owners wants a quick “prescription” to automatically reduce their income taxes with no investment of time or cooperation on their part to get us what we need to apply our proprietary useful tax saving tools!

 

I think the fast speed of information due to texting, email, internet has resulted in a “muddying” of what is important and what isn’t!

 

I look at this as positive from my standpoint. I get to work with the minority of business owners who appreciate the results that my team gets for them.

 

Our CPA firm is small so we do not need that many new clients to stay stimulated. Bigger firms need to get new clients whether they are cooperative or not so they can keep their staff busy.

 

If everyone who needed big tax savings became clients we would never be able to find enough qualified professionals because they just are not available! I found this out in 2006 when I was going to expand my CPA and CFP firm with additional employees.

 

These business owners are not bad people. They just have different priorities which are to focus on the urgencies in the moment. Maybe they spend time business operations and personal hobbies instead of saving income taxes.

 

Right now combined federal and state tax rates can be over 50% of taxable income.

 

Taxable income can be higher than Net Income because there are expenses that show up on the profit statement that are not tax deductible for income tax purposes. CPAs call them items “M-1” items because they show up on their S corporation and partnership returns as add backs to net profit.

 

For example: a business could have a profit on their tax returns of $100,000 but after adding back the “M-1s” which are not deductible, the taxable income could jump to a much higher number.

 

Example:
Net profit  $100,000

Add back items “M-1s” reflected as an annual expense for the profit statement but not tax deductible.

 

Shows up on profit and loss but not deductible for tax purposes:

 

+ life insurance premiums $15,0000 + disability insurance premiums $5,000

+ 50% of  meals and entertainment   $+4,000

+ penalties for late filing 2,000

 

Adjusted taxable income $126,000

 

So how much are business owners like the Losers’ losing by failing to focus on income taxes for 25 years?

 

If the Losers’ just saved $10,000 per year in income taxes per year for his 25 years as a business owner, he would have had close to $1,200,000.

Compound Period: Monthly
Nominal Annual Rate: 8.000%
CASH FLOW DATA

Event

Date

Amount

Number

Period

End Date

1

Invest

12/31/2013

10,000.00

30

Annual

12/31/2042

2

Return

12/31/2042

1,197,000.00

1

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About Jeffrey Brooks

Jeffrey Brooks, CPA, CFP, MBA since 1976 has specialized in helping clients save significant taxes, help businesses increase their cash flow, revenues and profits while increasing their control and satisfaction. Jeff and his accounting firm sincerely cares about the happiness of his clients.

Get In Touch

JBrooks Wealth Advisors, PC.

Certified Public Accountant
Address: 4647 N 32nd Street, Suite B245
Phoenix, Arizona 85018
Phone: 602-292-2009
Email: jeff@jbrookswa.com