Hiring the right business advisors could save thousands in fees and taxes

August 9, 2024 Vaseline blog 0

Hiring the right business advisors could save thousands in fees and taxes

Osborne Rincon CPAs
| Palm Springs Desert Sun

As businesses navigate the complexities of growth, compliance and strategic planning, the role of skilled business advisors becomes increasingly crucial. From navigating tax laws to optimizing operations, the right advisors can save businesses significant amounts in fees and unlock valuable tax credits. Here’s why engaging the right expertise can be a game-changer for your business.

Being informed on new and little-known regulations

When the government implements new rules for businesses, the expectation is that business owners and managers themselves need to stay informed. But how can you stay on top of new regulations if you don’t know about them?

Osborne Rincon – a La Quinta, California-based CPA and business advisory firm – uncovered important information about the Corporate Transparency Act (CTA) through its extensive review of government resources, and the firm’s team soon realized there was no real effort underway to communicate with businesses directly about the CTA.

The US government refers businesses to “official websites, publications, educational programs, professional associations and financial institutions” to find information on the CTA – but unless you know it exists, you won’t be researching it.

That’s why Osborne Rincon sent a letter to all of his clients advising them about the CTA. While managing any necessary reporting required by the CTA is a legal task and not something Osborne Rincon would handle directly on behalf of clients – the firm knew it was important that, as their clients’ business advisory firm – they informed their clients about the regulation to make them aware that this is another area for clients to ensure that they are compliant.

US federal law enacted the CTA on January 1, 2021, as part of the National Defense Authorization Act (NDAA). The CTA aims to enhance transparency and combat financial crimes, such as money laundering, terrorism financing, tax evasion, and other illicit activities, by requiring certain entities to report information about their beneficial owners to the US Department of the Treasury’s Financial Crimes Enforcement Network ( FinCEN).

The CTA primarily targets corporations, limited liability companies (LLCs), and other similar entities created or registered in the United States. The compliance burden falls upon businesses affected by the CTA to gather and report beneficial ownership information accurately. Non-compliance can result in significant penalties, including fines and imprisonment.

“While CTA reporting should be taken on by our clients directly or through the assistance of their attorney, we felt it was critical to inform clients about the CTA – especially when violations of the reporting requirements can result in civil penalties of up to $500 per day or even criminal penalties including fines and imprisonment for up to two years,” said Keith Lyrla, CPA and Tax Director at Osborne Rincon. “If we didn’t share this information with clients, we’re not sure they would have been alerted about this new regulation.”

Tax credits and beyond: CPA firms expanding to business advisory services

A business’s CPA should be capable of advising on a number of strategies that could save their clients’ money and help them avoid audits and penalties. One of the most significant ways a CPA firm that also operates as a business advisory firm can be beneficial to their clients is through tax optimization.

Tax laws are complex and frequently change, making it challenging for business owners to stay up-to-date. A skilled tax professional who also acts as a business advisor can identify eligible tax credits, such as the California Pass-Through Entity (PTE) Tax.

The California PTE was introduced as part of Assembly Bill 150, known as the Small Business Relief Act, enacted on July 16, 2021. Pass-through entities include S corporations, partnerships, and limited liability companies (LLCs) that elect to be taxed as partnerships or S corporations. These entities do not pay income tax at the corporate level. Instead, income is “passed through” to the individual owners, who then report it on their personal tax returns.

“While it may sound simple, the California PTE has many issues that need to be carefully analyzed, both at the pass-through entity and member levels,” said Lyrla. “With in-depth knowledge of our clients’ operations and the applicable Federal and California tax provisions, we are not only qualified to guide our clients through this process, but as their overall business advisors, we look at financial impacts on other aspects of their companies, as well.”

Expert advice that affects the bottom line

The right business advisory firm can save businesses thousands – or perhaps even millions. For one client in particular, Osborne Rincon was able to positively improve their bottom line through some very complex sections of California tax code. The firm helped the client save $340,000 in 2021, $1.6 million in 2022 and $950,000 in 2023.

Choosing the right business advisory firm is one of the most important decisions you can make for your company. Make sure the firm has expertise relevant to your specific needs and industry, has a stellar reputation including a strong track record and positive references from other businesses, and that they are approachable and capable of explaining complex concepts in understandable terms.

Hiring the right business advisory firm is an investment that can yield significant returns. From reducing tax liabilities to optimizing operations, business advisory firms bring critical insights that can lead to substantial financial savings. By carefully selecting experienced professionals, businesses can not only save on fees and taxes but also set a solid foundation for sustainable growth and success.

To learn more, visit www.OsborneRincon.com.

Members of the editorial and news staff of USA TODAY Network were not involved in the creation of this content.