Who here has constructive philosophy regarding taxes? - Page 2
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  1. #21
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    Quote Originally Posted by adama View Post
    Not sure if its the same there, but over here you can employ any firm, consultancy, tax specialists, you wish, but when they screw it up, remember its you thats still liable not them!
    I think that's pretty much true in the states too. There's a disclaimer on the cover letter our accountant sends with our tax returns basically saying he calculated the return based only on information we provided him.

    We had what looked like a serious problem with a legal capital gains tax avoidance scheme setup up jointly by $500/hour accountant and attorney. One or the other had made an error in filing papers leaving us with a potential large tax liability. Without admitting their error they were able to petition the IRS there was no intention of fraud. We certainly would have been left holding the bag if the IRS hadn't accepted their reasoning. It still cost us several thousand to get the error corrected. Needless to say we don't deal with either of them any longer.

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  3. #22
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    Tax Philosophy:

    One has an obligation to pay your taxes and a legal duty to pay as little as possible.
    Get a CPA.

    Chazsani

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  5. #23
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    Oompa -

    I'm just a sole proprietor one man shop in Vershire (yeah, I know, where's that? :-) ) so don't know how similar your situation is to mine.

    A couple Vermont related pieces of advice- the Vermont Dept of Taxes personnel are pleasant enough to talk to, but the dept is hardass when it comes time to collect. They can't change the tax rates, but they've been reinterpreting the statutes and upping penalties and late fees.

    Sales and Use tax is prob the most important. (I'm assuming you have a tax #.) Use the mfg exemption to the max and be sure to charge sales tax on the labor that goes into fabricated and machined products. Get sales tax exemption forms from your customers and keep them up to date. State audits are no fun- one day a stranger walks in unannounced, demands a desk, wants to know where the bathroom is and settles in for days of examining every record you have, which you have to fetch for them. So keep up with the State tax bureaucracy. The Feds don't have enough examiners to go after small fry like us, but Vermont does.

    While good tax advice is a must, you can do your own taxes, at least at first. An adviser is handy, especially when learning about things like capital gains and depreciation, but once through, you can do it with occasional help. And the State and IRS (the horse's mouth) give free advice. When you get bigger (or maybe you already are), consider having someone else do your taxes, but stay knowledgeable. Ultimately, you're responsible for the return.

    Tell us more about your situation. How many employees, what you make/do, size, location, whether you own the shop, land, etc and we'd be able to give better advice.

    Neil

  6. #24
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    (Most of this advice is from Joe Martin, the founder of Sherline Products)

    * If an accountant is saving you money, it means you don't know as much as you should about taxes

    * Do not make an S Corporation; S Corporations are not good for manufacturers or shops for liability reasons

    * Minimize your inventory, if you get big enough that you have to switch to accrual accounting, having a lot of static inventory will kill you

    * Taxes are much higher currently on income than on capital gains, so it is better to increase your capital value, than to produce profits (income), if the corporate tax rate gets cut to 20% and you are in a low-tax state, then that might change

    * There are tax guides that summarize tax law, its a good idea to read them

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