By: Ariel Gamburg
As a business owner, you try to run a tight ship.
You maximize margins to yield the highest gross profit. You set monthly ratios to control and minimize your expenses. And you’re always looking for alternatives to reduce cost. These initiatives will hopefully result in optimized profit for your business, but is that really your bottom line?
Wait! There’s one more step before all that money comes into your pocket for you to enjoy. It’s what we can refer to as the final bottom line: income taxes.
See taxes like any other expense: Be hard on the problem, not just Uncle Sam.
I’ve consulted and prepared taxes for a lot of very successful businesses and have noticed that this final bottom line — that is, taxes — is all too often overlooked. The main problem is that taxes are taken for granted; most business owners pay what their accountant tells them to pay, or mindlessly follow what the computer software automatically calculates. Taxes are like any item on your profit and loss statement and, with careful planning, tax expenses can be legally minimized.
There’s a quote I love from Judge Learned Hand, who in 1935 stated one of the most important views on taxes:
“Anyone may arrange his affairs so that his taxes shall be as low as possible; he is not bound to choose that pattern which best pays the treasury. There is not even a patriotic duty to increase one’s taxes. Over and over again the Courts have said that there is nothing sinister in so arranging affairs as to keep taxes as low as possible. Everyone does it, rich and poor alike and all do right, for nobody owes any public duty to pay more than the law demands.”
First, get a tax adviser you feel comfortable working with and ask them for help. Perhaps you’ve inherited your CPA from your old boss or a parent, but even if you feel obligated to use them for filing year-end taxes, your tax adviser should feel like a supportive partner, as there’s a lot of cooperative work ahead. Once you find the right person, here are a few strategies you can start reviewing together.
**This post was originally published at Forbes.com**