Rescuing $555,793 – How Tax Planning Helped a Successful Law Practice Become Tax Effective and Rescue Wasted Tax Dollars
The same old same old isn’t good enough for successful law firms. These changes will help you find the tax deductions you’ve been missing…
Change is a scary thing, especially in business.
We see it all the time at the law firms we work with. They stick to the same processes and people they started out with, even as the firm grows.
They don’t adapt to the changes that success brings.
And the result?
They end up costing their practices thousands of dollars due to inefficiency and poor tax planning.
When it comes to your taxes, there’s a huge difference between a preparer and a planner, and effective tax planning.
That’s what Andrew discovered when he came to Ed Lloyd & Associates.
Creating a Change – Tax Planning
When Andrew came to us, he was a success in every sense of the word. The Managing Partner of a successful law firm, he’d built an amazing team around him over the years. Every lawyer contributed something valuable to the firm. This meant that it grew almost constantly.
To deal with the tax issues this success brought, Andrew engaged the services of a large CPA firm.
They worked with him to prepare his taxes…
But that focus on preparation was causing problems.
Preparation Isn’t Enough
The techniques the CPA firm used may have worked well enough when Andrew first hired them.
However, the firm seemed to have no interest in helping Andrew rescue wasted tax dollars. This was a problem. Each year, his law firm became more successful and his tax bill shot up.
The CPAs he worked with did nothing to alleviate that burden. And the reason is that they focused solely on preparing his taxes, rather than helping him create a tax-effective plan.
It’s a problem we see with many law firms.
Instead of consulting tax planners, they consult tax preparers. And in our experience, fewer than 2% of tax preparers have the ability to create a successful tax plan to save taxes.
They just focus on doing the same things they always do, which means their clients constantly overpay on their income taxes.
In Andrew’s case, it would have cost him $555,793!
The Missed Provision
Andrew knew that other firms the same size didn’t pay as much in taxes. So, he engaged us to create a tax plan for his business, to rescue wasted tax dollars and save money.
The first thing we did was to look at the way his CPA firm currently prepared his taxes.
Bear in mind that Andrew had chosen a big accounting company. They should have been on top of their game when it came to tax law.
Our examination of Andrew’s documents found that they’d missed a provision in the Internal Revenue Code.
Worse yet, this wasn’t a new provision. It dated from 1958, so it’s not like it was a new thing that the CPA firm had just missed.
This single provision cost Andrew and his firm thousands of dollars every year. When we showed him that, he committed fully to having us create his tax plan to rescue wasted tax dollars.
Tax Planning – What We Did
We worked on two areas for Andrew – business structure and tax deductions.
In terms of structure, we demonstrated that Andrew’s firm wasn’t set up in the most tax-efficient manner. It needed to change because the current structure cost him tens of thousands of dollars per year.
On top of that, it would bite him hard if the time ever came to sell the firm.
Then, there were the deductions.
Our examination of Andrew’s records showed that he missed a ton of deductions on both the business and personal levels. And again, his CPA firm didn’t tell him about his missed claims.
They just took what he gave them and prepared a few forms.
We went through every possible deduction in Andrew’s business and ended up saving him tens of thousands of dollars per year.
The End Result – Tax Savings
That’s how much money we helped Andrew rescue from the clutches of the IRS.
Thanks to his work with us, Andrew now has the perfect structure in place for a successful law firm. He’s taking all the deductions he’s able to take.
Plus, he’s prepared for the future. Should he ever want to sell the business, he won’t face the tax issues his previous structure would have created.
The Lessons You Can Learn – Rescue Dollars
Andrew’s story offers a harrowing picture of what can happen if you don’t make changes to align with your firm’s success.
In his case, the CPA firm he trusted to help him ended up costing him hundreds of thousands of dollars.
These are the three lessons you can learn from Andrew’s story.
Lesson #1 – Preparation Isn’t Planning
Tax preparers don’t like to change.
They prefer to just get your documents, fill out some forms, and submit them year after year. It’s simple, it’s easy…
And it means they’re not working in your best interests.
You need to do more than just prepare your taxes every year. You need to create a tax plan that will help you save as much money as possible. This means working with a team that understands all the rules and regulations the IRS throws at you.
Don’t just stick with what you know. Have the courage to make a change. It could save you thousands of dollars.
Lesson #2 – Don’t Miss Out on Your Deductions
Every year, the IRS lays out the rules for what you can and can’t deduct from your business and personal taxes.
And every year, business owners miss out on thousands of dollars’ worth of deductions. It’s preparation vs. tax planning again. When you just prepare your taxes, you don’t account for the changes in tax law that could benefit you, and save tax dollars.
That’s exactly what happened to Andrew. It wasn’t until he worked with a tax planner that he realized there were dozens of deductions he wasn’t claiming.
Lesson #3 – Success Isn’t Static
If Andrew hadn’t come to us, he’d still be a success. His law firm would have continued to grow and make enough money to support himself and his family…
At least for a while.
But the most successful people in the world recognize that they need to change to accelerate growth and achieve their dreams.
Success starts to wane when you become complacent.
That’s why taking the step to talk to us was so important for Andrew. Without the courage to do something about his situation, he’d have lost hundreds of thousands of dollars.
It’s Time to Take Your First Step – Save Taxes
Are you the head of a successful law firm? And are you working with a CPA right now to prepare your taxes?
If so, you’re in exactly the same position Andrew found himself in. That means you may have the same issues when it comes to your firm’s tax effectiveness.
It’s time to make a change.
But it doesn’t come without the courage to take the first step. That’s what we’re for.
Ed Lloyd & Associates wants to open your eyes to all the tax savings your law firm could be making right now. It starts when you book a strategy session.
Learn more here about sustained growth and profitability.
When you’re ready to accelerate your business, schedule a call with me.
Have an awesome day!
Ed Lloyd, CPA, PFC, CTS, CVB
(704) 831-7000 | firstname.lastname@example.org | www.elcpa.com