We Turned a $90k Tax Bill into a Tax Refund with Tax Advisory

Our Initial Tax Advisory Assessment

As a tax advisory & accounting firm, we frequently see highly skilled business owners who are experts in their field paying more than they should be in state & federal income taxes.    

Our work with this client was a uniquely valuable experience. Our client is a Southern California business owner operating in the network technology industry. Each year, he has worked diligently to grow and build his business with excellent service and technical capabilities. As we began our work, we quickly realized that this successful business owner was paying a huge chunk of his hard earned income to state and federal income states.  

Our initial review of this client’s financial documents and tax returns revealed numerous opportunities for our client to benefit from tax advisory. In our experience as accounting & tax experts, we believe high income earners with significant tax liabilities residing in high tax states like California are generally better positioned to benefit from advanced tax strategies.

Strategic Implementation is Critical to Tax Planning 

In order to provide a thorough structure for delivering our services, we diligently reviewed this client’s existing business structure, financial operations, and tax filing status to understand their unique situation and match the best possible tax strategies.

For this client, our plan involves strategic implementation over time. Along the way, we create documentation systems and new accounting procedures to track applicable deductions effectively.

Here’s a Breakdown of This Client’s Tax Planning Roadmap

Through utilizing the Pass-Through-Entity Tax election, we were able to help our client implement one of the primary benefits of operating as an S-Corporation in the state of California. We assigned family members effective business roles with employment compensation attached. This careful restructuring of family involvement resulted in otherwise overlooked tax savings for this small business. The change in business planning allowed us to implement the Augusta Rule, unlocking additional tax advantages.

1. Our Plan Focused on Tax Savings from Deductions

During the implementation phase, we delivered an accountable plan with clear reimbursement procedures, in order to allow officers to be reimbursed for ordinary business expenses.
By taking a thorough approach to tax strategy, we’re able to recommend tax deductible investments like Health Savings Accounts (HSAs) and Roth IRAs.
These are the top two tax advantaged accounts that we recommend our clients utilize in their tax plan. Working with a tax strategist, these benefit programs are backed by documentation to ensure compliance and easy tracking.

2. Maximizing Real Estate Tax Benefits

This client was uniquely positioned to benefit from tax advisory due to his significant business income and rental property activity. The real estate tax code offers unmatched benefits for investors in residential and commercial rental properties. For this client’s tax plan, we provided a thorough cost segregation study in order to capture accelerated depreciation.

3. The Results Were Significant 

With our tax advisory & strategic implementation, we transformed this client’s tax situation dramatically in a short period of time. Their projected Adjusted Gross Income dropped from $415,500 to $85,300, and their $90,161 tax bill became a $1,385 refund. That’s over $91,546 in total first-year tax savings – money that can be used to re-invest back into business growth, to pay down debt, or to build wealth for retirement.

Looking Forward with On-Going Advisory

Our relationship with this client continues through regular strategy sessions and quarterly reviews. We monitor their tax position, adapt to changing business needs, and refine strategies as new opportunities arise. This ongoing tax advisory relationship ensures their success continues year after year. Through careful planning and systematic implementation, we help our clients transform their tax situation while ensuring legal compliance.

We’re pleased to see our clients put their hard earned money back into their business, improve their tax strategies, and build their wealth for retirement. With a proper tax plan in place, we set up our tax advisory clients for tax efficiency year after year.

As your tax advisory partner, we strive to be your business & accounting resource for success.

Our firm values the impact of our work helping small business owners to utilize the same tax strategies as the mega-wealthy.