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How to Make Smart Decisions in Tax Matters
1) Use a tax professional to prepare your tax returns and
2) Involve them in your overall strategy design and execution.
3) In the fall, no later than mid-November we recommend a planning session with your CPA for two purposes: a) estimate April tax liability so there is time to prepare where those funds will come from and b) determine if there are any tax strategies that need to be implemented before the end of the calendar year.
Their greatest contribution is to your overall strategy, but they get paid by preparing your returns.
We don't recommend using a tax expert to oversee the overall strategy unless they do so by orchestrating a cross-functional team of experts. We strongly recommend for our clients that a tax expert be intimately involved together with the rest of your expert team. The tax expert is a very valuable member of the cross-functional team.
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Common Mistakes
Typically mistakes can be traced to not using a tax expert as a part of your collaborative team of experts. Like any other expert, it's important to choose wisely.
1) Unless you are a CPA, if you are doing your own tax returns, we suggest firing yourself immediately. Do we really need to explain why? :-)
2) Poorly run CPA Practice. Common among our most talented and educated professions like doctors, lawyers and accountants are poorly run businesses. Technical competence is not a replacement for a well-run business. So be sure to choose a CPA that is technically qualified (most are) but also has a smooth running process-driven office, outstanding customer-centric service and is passionate about working as a part of a team of experts.
3) Allowing the "tax tail to wag the dog". We all want to pay the least amount we are legally obligated to pay in taxes. But an obsession to paying the least amount of tax can lead to poor overall decisions. It's the overall after-tax result that counts, not paying the least tax.
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What to Do Next
Simply follow our advice - use a tax expert and make sure they participate in the overall strategy creation and monitoring. Even better use an comprehensive wealth advisor that does this for you.
Begin with The End
in Mind: For any successful journey, you need a compelling vision AS THE OVERALL FIRST STEP.
Because that visioning process is such a critical first step, we scoured the world for the best such process. We chose the visioning tool Financial Road Map for Living Your life on Purpose. We facilitate Road Maps for individuals/couple as a free service, even knowing in advance that you are not a fit to our services. Contact us to schedule a Road Map meeting. We can also provide a brief 20-30 minute Road Map demo on the phone.
You may wish to read articles about how to choose an advisor. Be sure to understand their fees. Call us. We have a book we can share with you that includes advice on how to find a good advisor, what to ask, how to interview. |
