There’s a familiar saying: “Don’t look back. You’re not going that way.”
Traditional tax preparers generally look back. That’s their job. But there’s a new way of thinking that looks forward. Wouldn’t you like to start thinking and acting like a Fortune 500 company. How? By combining tax information with operations management, a future-oriented CPA can transform your business with the services they provide to specialized clients like Realtors. They can help you transform your accounting and tax work into an investment and a profit center rather than an expense.
As you are reading this blog, the U.S. Congress is contemplating a new tax structure that will affect all of us in some way. And it will affect our clients as well. Now is the time to start anticipating what lies ahead. I wish our crystal ball was all polished and ready with some answers. But it isn’t, so the best thing to do as 2017 is about to roll into 2018 is to seek professional advice.
Of course not all Realtors are alike. We each have different needs when it comes to financial planning. But if you want to maximize the money that goes into your pocket, consider these comparisons:
The Looking Back Accounting Strategy
- Spend money at year-end to create tax deductions.
- Estimate your year-end SEP deposit requirements.
- Increase your budget for expenses based on the Consumer Price Index
- Estimate capital gains taxes for large transactions
- Consider risk management needs only after a serious event occurs.
The Looking Ahead Accounting Strategy
- Set goals and create strategies to reduce your tax liability.
- Recommend creative retirement plan options.
- Review your expense budget and redirect spending to assure maximum value.
- Defer capital gains taxes on investments for up to 30 years.
- Reduce risk and save money by applying corporate risk management tools.
How the New Strategy Benefits You
This new approach to tax planning is based on a new way of thinking by the American Institute of Certified Public Accountants (AICPA). They say that just focusing on tax returns means you may be missing out on some major financial opportunities. AICPA says we need “a new way of thinking about taxes.” If you choose to look for a professional that has adopted this new view, there are several ways you’ll benefit.
- You have time to pay attention to your clients. You are freed up to be the expert in your business while other people take on the responsibility of being the experts in managing your taxes and operations management.
- You will reduce taxes and increase profits. The new wave of experts considers the tax implications of every business activity and transaction and recommends tactics to minimize your tax liability and increase your profits.
- You’ll keep up with current trends. Tax and operations professionals stay up to date on the latest trends in both technology and tax policy and apply their expertise to your business.
So as we’re tuning up the orchestra for a few bars of “Auld Lang Syne,” here are three action steps you might want to take before you ring in the new year:
Set aside time to plan. Don’t just play it by ear. Effective planning means that you take time to evaluate your current tax situation. Also think about how, or if, your circumstances might change next year. You can realize substantial tax savings if you’ll be paying taxes at a lower rate in one year than in the other. However, you need to implement any changes before December 31, so don’t procrastinate!
Consider income and deductions. If you think you might be in a lower tax bracket next year, try to defer some of this year’s income, if you can. Commission and bonuses, if they are substantial, can easily be deferred.
Accelerate expenses. If you need to purchase any equipment, you might want to do it this year. Make charitable contributions, and pay medical expenses if you can.
If you choose to look for a new accounting strategist, you can use the information we’ve provided to interview potential providers. Ask the right questions, get some good answers, and make your choice. The bottom line is this: some people let things happen; others make things happen. When it comes to your finances, be the one who makes things happen—for yourself.