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Why Didn’t My CPA Tell Me THAT?

Asking a Why question leads to finding out the root cause of the matter. This book is the result of several Tax Professionals trained as Certified Tax Coaches to put together our expertise in writing to help educate taxpayers on the differences between tax preparation and tax planning. Napoleon Hill in his book Think & Grow Rich writes about the Power of the Master Mind. He says “Master Mind” may be defined as: “Coordination of knowledge and effort, in a spirit of harmony, between two or more people, for the attainment of a definite purpose”. That is how you multiply your brain power. I see this book as the  Power of a Mastermind.

Is there a difference between Tax Preparation and Tax Planning? Yes, with tax preparation you are looking at history and once it’s done it’s done. With tax preparation you make sure you put the right numbers on the right form and make sure that your tax return is filed on time. You probably only get to see your tax professional once a year or if you do it yourself you touch your paperwork once a year. It’s compliance. On the other hand tax planning looks at history together with your current circumstances and your future goals. Yes, some people can do their own taxes but once you start owning a business or investing in real estate or long term investments you need the help of a knowledgeable Tax Professional.

It is one thing to know about tax deductions and credits to help you pay less tax but putting these ideas into action is another. It is not a one size fits all approach. While there are deductions that are common to all businesses, each business has its own deductions that are specific to that industry. It takes several steps such as interviewing the business owner about their goals, go through the appropriate steps to run the numbers in conjunction with their goals and tax law, review the results, present the results, implement those results and follow up to see if the tax plan is working.  Sometimes a potential client will meet with me and tell me that my friend owns a Limited Liability Company (LLC) and they want to form an LLC too. Just because an LLC works for your friend does not mean it’s the best business solution for you.

There are several items to consider that may be unique to your own business. Therefore,  a knowledgeable tax professional can help you determine the best entity for your business and optimize your tax strategy through tax planning. When you plan you are better prepared. They do work hand in hand. The book is meant for taxpayers to ask themselves questions about their own tax situations. Knowledge is power. It’s not only in taxes even in our lives if we plan we are better prepared.

Written by Esther Phahla

Esther Phahla is a Certified Public Accountant and Certified Tax Coach in Temecula. She also holds a Masters of Science in Taxation. She is the Best Selling Co-Author of a Tax Planning book “Why Didn’t My CPA Tell Me That”. She can be reached at (951) 514-2652.

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