A tax attorney can be just as helpful as an accountant, so why does your business need one? Take a look at why your business should be seeking out help from a tax attorney.
The old wisdom says that there are two people you need to start a business: an accountant and a lawyer. More specifically, you need a tax attorney.
Let’s face it – the US tax code is far too complicated to learn on the fly. You have a business to run.
Here, we’re breaking down what a tax lawyer is, what they can do for you, and what you need to know to hire one. Let’s get into it!
What Is a Tax Attorney?
First, the basics: what is a tax lawyer?
To put it simply, tax attorneys help clients plan for their taxes, file taxes, and make sure they don’t get into trouble with the IRS.
What Can They Do for You?
So, what can a tax lawyer do that your accountant can’t?
Tax preparation services are a worthwhile investment for a business. After all, most people aren’t tax professionals. But your accountant completes a slightly different function for your business.
A certified public accountant (CPA) is the person you want to go to when you need your taxes prepared and your tax returns filed. Both lawyers and CPAs can advise a business on financial decisions related to taxes.
Tax lawyers don’t prepare tax returns, though they may advise a client on aspects of a return.
Instead, they focus on the legal side of a return. Their role is to defend the client (you) in the face of legal challenges.
Why You Need to See a Tax Attorney
You might be wondering, “How can a tax attorney help me?” After all, you’re an upstanding citizen who always files your taxes on time. Why would you need a lawyer?
For a variety of reasons.
At the heart of it is this: ultimately, it helps to have a professional fighting for you. Plus, a professional knows more about the intricacies of the tax code than you do.
Keeping You Out of Trouble
One of the biggest mistakes a business can make is waiting until they’re already in trouble to hire a lawyer.
A lawyer is a lot like a doctor. If you check in with one on a regular basis, you’ll have a better handle on your health than if you only go in once you’ve spotted a problem.
Working with a lawyer on a constant basis instead of waiting until you’re already in trouble. This way, he can stop playing catch up and spend more time actually helping you.
Unless you’re a tax professional yourself, there’s just no way that you know the US tax law as well as an educated tax lawyer.
It takes time to learn what your tax obligations are and what you need to do to meet them. The reality is that you don’t have time in the day to manage it.
Furthermore, taxes are not something you can learn while trying to do your actual job. The IRS isn’t going to wait around for you to figure out the details, nor are they going to forgive neglect of the law because you don’t know what you’re doing.
Make your life easier and let a lawyer handle it for you.
Handle the IRS
If you don’t need any other reason to hire a tax attorney, hire them to help you manage the IRS.
The IRS and the federal government aren’t especially patient when you owe them money. They also have a lot of tools at their disposal, such as notices, interviews, and audits, which you just aren’t prepared to handle on your own.
On top of that, many tax documents are horribly confusing for those who don’t know how to read them. It’s easy to make mistakes that will come back to bite you when Tax Day has passed.
A tax lawyer can help you keep your cool and handle the IRS with poise.
When to Hire a Tax Attorney
So, when should you hire a tax attorney?
Lawyers, like doctors, can do a better job if they don’t have to scramble to play catch up. If you can afford it, it’s always better to keep in regular contact with a lawyer who knows your business.
That way, if you need their services, they can spend less time trying to figure out what your business actually does and more time helping you solve the problem.
Before You’re Being Sued
While it’s tempting to put off hiring a lawyer until you’re facing legal problems, it’s a good idea to hire a lawyer before you ever get sued.
If you’re being sued, it’s already too late.
Why? Because if the county sheriff is standing at your door with a summons, you’re already in trouble for doing something wrong.
At this point, your lawyer is doing damage control. It’s not a question of whether there was a problem, it’s a question of how much you’ll have to pay to fix it.
Instead, you need a lawyer to keep you from getting in trouble in the first place.
During Tax Season
To that end, you should have a lawyer helping you manage tax season from the first day of the year.
Your accountant knows how to manage the numbers. Your lawyer knows how to look at your paperwork and make sure that you don’t get in trouble with your pals at the IRS.
Between the two of them, they can make sure you file your taxes properly the first time. They also make it easier to avoid common tax mistakes and stay on course for a good fiscal year.
When You’re Audited by the IRS
In the event that you do get in trouble with the IRS, you definitely need a lawyer to help you get through the process.
Let’s be honest. The IRS wants their money, and you want the IRS to leave you alone so you can run your business in peace. A tax attorney can make both sides happy as quickly as possible.
It’s a win-win.
Tips When Hiring a Tax Attorney
There’s a fine art to hiring a tax lawyer. There’s even more art involved in finding a good lawyer who works with your business needs.
The first thing to know is what your business can realistically afford. While we would all like to be able to afford the best lawyer money can buy, they won’t do you any good if you can’t afford them.
You also need a lawyer that knows how to meet your needs. A self-employed business owner, for example, has different tax needs than a major corporation.
Big or Small Firm?
Once you know what you need, you need to decide whether you want to work with a large or small law firm.
As a rule, the larger the firm, the higher the overhead, which means that the firm prices will be steeper. However, the pricier overhead also means that the firm has more resources to draw on if they need to build a case on your behalf.
When you’re looking for an attorney, take a realistic look at your resources. Strike a balance between what you can afford and the best available options.
Find a Specialist
One thing you shouldn’t compromise on is finding a lawyer who specializes in tax law.
It might be tempting to find a generalist lawyer in case you need them to fulfill other roles for you. But if you get in trouble, you need someone who knows the specifics of tax law like the back of their hand.
Don’t be shy to ask about your lawyer’s specialty and what kinds of cases they’ve worked on. You want someone who knows the law, especially as it relates to your specific sector.
Find an Experienced and Well-Connected Lawyer
On a related note, don’t be too shy to ask about your lawyer’s specific experience.
You also want to find out about the kinds of connections he has.
Try to find a lawyer who can figure out the problem you’re dealing with and fix the parts of the issue that pertain to them. He should also be able to refer you to good lawyers who can fix the parts that are outside his expertise.
You might be wondering – why would you want a lawyer to refer you to someone else?
There are some great lawyers out there, but no one can possibly understand every facet of the law. A good lawyer will have enough connections to make sure you’re well taken care of even if your problem is outside their focus area.
More Tips to Make Your Money Work for You
Making your money work for your business doesn’t end with finding a great tax attorney.
Check out our blog for all kinds of money tips, such as this post on the five taxes you should know before starting a London-based business.