When you're starting out, you can be reluctant to hire a small business tax attorney. You need to convinced that hiring an attorney is worth it, since there are free materials online to read, including publications posted on the Internal Revenue Service (IRS) website. There's even tax planning and filing software to download or use online that's affordable. Why hire a small business tax attorney?
1. Reduce Tax Audits
No one can shield you from a tax audit. If the IRS wants to audit your business, it will find a reason. However, a small business tax attorney can eliminate the red flags that will invite an audit by the IRS. The attorney's job is to know federal and state tax laws, and how to apply them to protect and benefit clients. A small business tax attorney can teach you how to set up your business systems and accounting, so that the IRS doesn't have a valid reason to audit your business. You don't want an IRS agent coming to your home if you can avoid it, which makes paying an attorney for consultations worthwhile.
2. Answer Personal Questions
You won't find answers to all of your questions on the Internet, and sometimes there is conflicting information. That's okay if you're researching how to cook your favorite dish, because you can afford to make a mistake. You cannot afford to make a tax mistake, that can lead to tax penalties on top of a tax liability. A small business tax attorney is there to guide you, and answer your personal questions, so that you can avoid tax related mistakes.
3. Business Structures
Your choice for a business structure, whether it's a limited liability company or a sole proprietorship, has tax consequences. Working at home also impacts the decision you make, because your home or personal assets have to be taken into consideration. A small business tax attorney can look at your entire financial picture, and advise you on how to form your business. If you choose the wrong business structure, you could pay twice as much in taxes.
4. Avoid Mistakes in Taking Deductions
Myths about the business deductions you can take are numerous, and a trap for unsuspecting work-at-home moms. Some of the publications offered by the IRS are confusing on what's allowed and what's not. A small business tax attorney can clear everything up for you, and consult with you on exactly what business deductions you can and should take. You can also hire them to prepare your taxes for you.
5. Buying and Selling a Business
If you want to buy a business, then you could use the help of a small business tax attorney. There are ways to structure the deal, so that you can end up with tax write-offs or limit the amount of taxes owed because of the transaction. Hire an attorney prior to the purchase, to get the guidance you need on how to get the most tax benefits possible.
Even if you can't afford a small business tax attorney full time, you should get a one or two hour consultation before you launch your business.