In this video, Brian Kot, a Principal at CK, shares valuable insights into the most common questions clients ask about tax planning, document retention, business sales and financial reporting. From strategies to reduce your tax liability and organize your financial records to best practices when selling your business and improving accounting processes, Brian highlights the importance of proactive planning and collaboration with your CPA.

Transcript

My name is Brian Kot and I am a principal with Cray Kaiser Ltd. I’m often asked by my clients, “How can I reduce my tax liability?” The answer to this question comes with a lot of strategic planning between the client and your CPA. You want to at least minimally have an annual meeting with your CPA to discuss your tax situation and your financial planning on what’s going on with your business.

There are many suggestions typically that are offered such as contributing to an IRA or a sub-contribution or vehicle expenses might be missed or maximizing the depreciation deductions and purchasing certain assets within your business. In that conversation, it’s also very important to discuss the current tax rates and future tax planning. For example, you may want to try to defer income, or you might want to accelerate certain income to maximize current tax rates that are in effect today, for example, the capital gains tax rate. So having an effective meeting with your CPA in discussing these strategies is the optimal way of reducing your taxes, and it’s different between each individual and organization.

I’m often asked how long should I keep my documents for, especially in this age of digital world. The answer depends on the type of organization and also the type of documents that we’re discussing. Some documents you need to keep indefinitely, such as your corporate resolutions, your bylaws, your tax returns, your financial statements. We should always keep those forever and never destroy those and keep them in a digital format. There are other documents such as a lot of payroll documents need to be kept for a minimum of seven years and then there’s other documents especially on the individual side that you only need to keep for only three years and it also depends on the statute of limitations on how long you need to keep these documents for. I definitely recommend you check out our website if you click on the resource tab and search document retention. We have a guide that explains and gives an example of what documents you should keep either indefinitely or for seven years and remember that’s just a guide but it can be used as a rule of thumb.

You’re considering selling your business and often I’m asked how much do I owe in taxes? That’s a very challenging question to answer right off the bat, and a lot of planning needs to go involved. The first thing is to determine the market value of your business. And we recommend that you use an outside third party to assist you in determining the market value. Once the market value is determined, the way that the deal is structured and the sale is put together will significantly have an impact on how much you will pay in taxes, along with your personal tax situation. So we recommend before you, at any time, sign any agreement or sell your business. You consult with your tax advisor to go over that agreement in detail to determine if it is the most cost and tax efficient way for you to sell your business. Too often, we hear after the fact that our clients may have sold their business, or for that matter, entered into any type of a transaction. And if you would have consulted your tax advisor before entering that transaction, you may have saved a significant amount of taxes, as the transaction could have been structured differently.

Often, my clients will ask me, “How can I improve my financial reporting or get more timely reports, or I’ve lost my accountant, what do I do?” Here at Cray Kaiser, we have a dedicated team to assist you in your financial reporting. If you use a software such as QuickBooks or similar to QuickBooks, we can offer training on the program to ensure your employees properly know how to use the software. And we can also offer customization and create customized reports to help you understand your business. Having timely and accurate financial information available to you will enable you to make business decisions and help you grow your business.

Please consult a member of Cray Kaiser to understand the benefits that we can offer your organization to help you improve your financial reporting. Please review our website at craykaiser.com as we recently launched our Client Accounting Advisory Services webpage. You can find more information there and you can contact a member of our team at 630-953-4900.