Should I Hire a Tax Strategist?
May 02, 2024### Understanding When You Need a Tax Strategist: Insights from 'Keep What You Earn'
In the latest episode of "Keep What You Earn," Shannon takes us on an insightful journey exploring a common conundrum faced by entrepreneurs: the need for a tax strategist. She dives into the vivid world of tax planning and strategy, unearthing the reality behind the hype and offering practical advice on how business owners can make informed decisions to better manage their tax liabilities.
**Tax Planning Myths and Realities**
In the realm of entrepreneurship, tax planning and strategy can often feel like navigating through a maze blindfolded. Social media and networking groups abound with discussions on this topic, causing many to believe that hiring a tax strategist is the silver bullet to reduce their tax outlay significantly. Shannon, however, urges us to pause and consider the actual problem we're seeking to solve. It's not just about knowing a few areas of the internal revenue code but understanding how it applies to our unique situations.
**Strategist vs. Communicator**
Shannon stresses the importance of strategy alongside preparation. A preparer might complete your tax return, telling the story of your financial year, but what about authoring the next chapter? Having an advisor could be invaluable, and yet, a strategist isn't always the answer. Often, the issue lies not in the absence of complex strategies but in the lack of proactive communication and planning from your tax professional. You might just need someone who can guide you, with clear communication, through the tax landscape.
**The Real Problem: Surprise Tax Bills**
For many entrepreneurs, a tax strategist seems necessary when faced with an unexpectedly high tax bill. But Shannon shifts the focus to the core issue: the surprise factor. Many people aren't necessarily seeking wizard-like strategies but rather wish to eliminate the shock of an unforeseen tax liability. It's about planning and aligning your expectations with the outcomes.
**Empowerment Through Earning and Understanding**
Shannon's vision is to empower entrepreneurs not to shy away from their earning potential due to tax stress. She encourages business owners to "out earn the stress of taxes," striving for success so that tax payments are nothing more than an afterthought. This is achieved by adopting strategies that align with personal goals, legal considerations, and business activities, rather than bending over backward to squeeze into complex tax-saving tactics.
**Re-envisioning Tax Planning**
It appears the real magic isn't in finding a new tax gimmick each year but in thorough, well-communicated planning. For instance, Shannon's strategy of preparing a mid-year tax estimate eliminates end-of-year surprises, giving clients the ability to plan and save gradually. This process not only alleviates stress but also reinstates the joy of financial control and the empowerment that comes from being prepared.
**The Bigger Picture**
Ultimately, Shannon advises against making life-altering decisions solely for tax benefits. Whether it's choosing where to live or redesigning your lifestyle, these decisions should prioritize personal happiness and fulfillment. Effective tax planning should support — not dictate — these life choices.
**Adopt a Forward-Thinking Mindset**
The focus should be on earning and planning, not merely saving on taxes. By working with professionals who are future-focused and aligned with your goals, you can manage your taxes as an informed, planned part of your business operations, rather than a burdensome afterthought.
**Takeaways from 'Keep What You Earn'**
Shannon's honest and straightforward advice from the latest episode of "Keep What You Earn" allows us to reevaluate our approach to tax strategizing. She reminds us that while there are useful strategies out there, the goal isn't to chase each one but to establish a tax plan that complements our life and business goals. Remember, it's not just about minimizing liabilities; it's about maximizing life's potential while staying informed and prepared for your tax responsibilities.
What you'll hear in this episode:
07:04 California has high taxes, but estimation process.
09:17 Plan taxes around lifestyle, not vice versa.
12:37 Focus on earning, planning, and professional advice.
If you like this episode, check out:
S Corp Salary Explained Like a 3rd Grader
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The information contained in this podcast is intended for educational purposes only and is not individual tax advice. Please consult a qualified professional before implementing anything you learn.
