Increase Cash Flow by
Lowering Your Tax Bill

Increase Cash Flow with  
Specialized Tax Incentives 

It’s that time of year when business owners, CFOs and Controllers wince at the prospect of paying, or delay paying, another large income tax bill.

And even though the biggest concern small and midsize businesses have with their accountants – who they generally trust – is they think they could be doing more to reduce their taxes and help improve their cash flow.

And they’re usually right about that. The problem is that many tax incentives require special expertise – and it’s not accounting expertise – to document and claim their savings in ways that pass IRS muster.

Many businesses have no tax strategy. They treat their taxes like they’re an overhead expense – fixed costs they can’t control.

This isn’t smart business practice.

You have a business strategy, right? So why no tax strategy?

You probably want to minimize your taxes, but don’t know where to start.

“My Accountant Handles That”

Maybe you’re content thinking your accountant already handles that for you – because you don’t want to “go there” anyway.

But if they did, you’d remember the fat refund or tax credit check you deposited in your bank account.

If you have no such fond memories, you’re kidding yourself about this already being handled for you.

Help With Staffing & Recruitment

Big corporations know better. They maximize tax incentives to boost their bottom lines and free-up cash for reinvestment.

As a result, they enjoy the lion’s share of tax incentives while up to an estimated 95% of mid-size and smaller businesses miss out.

The irony, of course, is that these are the businesses most likely to reinvest tax incentive payments back into job growth and their local economies.

Mid-size and smaller businesses already account for the vast majority of job growth in America. Think of how much more job growth and stability there’d be if they were able to access the working capital tax incentives provide via hiring incentives like Work Opportunity Tax Credits (WOTC) and other federal and state hiring incentives..

Yet they remain mostly in the dark about how to put these tax incentives to work for their business.

Why?

Why Tax Strategy Proves So Elusive

There are a number of reasons, of course, but here are the three main ones…

1. You Assume You Don’t Qualify -If you’re like the majority of small and mid-size businesses, you probably assume you don’t qualify for tax incentives like the big boys anyway, right?

Very often – wrong!

The simplest incentive available relates to building costs to buy, build or renovate of $500,000 or more, or leasehold improvements of $250,000 or more. Claiming accelerated depreciation for a portion of these costs requires engineering-based studies that separate personal from real property. This is best done by  farming out this study to accelerate depreciation on your building(s) so you pay less in taxes now and a bit more later (every dollar in your account is worth more now than later, of course).

And the misnamed R&D tax credit is in actuality a payroll tax credit for certain employee activities like quality control and process improvements. If you make anything – from design to production to even construction – you may very well qualify, no lab coats or industry breakthroughs required.

2. General Practice Accountants – Most mid-size and smaller businesses use mid-size and smaller accounting firms. This means they can miss out on the specialized tax services the Big 4 and large regional accounting firms offer their bigger corporate clients.

Most smaller accounting firms are tax generalists ill-equipped for specialized tax incentives that require engineering, intellectual property, and other specialized expertise. It’s similar to the difference between general practice and specialist physicians – both serve important functions, but you miss out on a lot without access to the specialists.

You essentially end up falling through the cracks between your generalist accountant and the engineering and other specialists needed to minimize risk and optimize your tax savings.

3. Yuck!…It’s about taxes.

Most of us don’t like paying taxes – or even thinking about them.

We may complain about them – a lot – but we often avoid actually doing much about them.

For many, the preferred path is simply to avoid thinking about them until their accountant forces them to do their annual or quarterly tax filing. That’s enough already.

Which means the biggest tax problem for many mid-size and smaller businesses isn’t tax evasion, but tax savings evasion.

Your head knows there are smarter ways to manage your corporate taxes, but your heart keeps telling you to look away. And there are usually enough pressing matters in running your business to reinforce this harmful predisposition.

Excuses, Excuses…

These are all understandable excuses for ignoring the tax incentives the government offers your business. But that’s all they are – excuses.

You only need one excuse for failure – and no one wants to hear it.

You manage to get beyond excuses in other aspects of your business. Do the same with your taxes – bring in the specialized tax expertise your business needs to work with your accountants to get the tax savings and incentives your business deserves.

You’ve already earned them – and are essentially giving the government an interest-free loan when you neglect to collect these tax savings.

You can get started with no risk. If we can’t find tax savings for your business, there’s no fee for our services trying.

No savings, no fee.

Click the orange button below to use our online tax savings calculator for a free and instant estimate of your potential tax savings…

Click for GMG's tax savings calculator

How NOT to Cut Costs

Cut Costs, But Focus On Value

After more decades than I’ll admit to as a subscriber to The Boston Globe, I cancelled my subscription this past week.

Poorly Planned Cost Cuts Can Hurt Business
Poorly Planned Cost Cuts Can Hurt Business

In case you’re not a New Englander, The Globe has suffered notoriously  in the wake of its bungled effort to cut costs by switching delivery contractors.

They apparently did so without first assuring their chosen replacement had the capacity to deliver their newspapers as widely, timely, and consistently as their former delivery contractor.

They didn’t have that capacity, and still don’t. In what has been widely reported as a logistical nightmare, thousands of subscribers have had their morning rituals disrupted by this procurement debacle.

Some of us were able to find solace in the online version, but that’s not the service to which we’d subscribed. And getting payment credits upon complaint is no substitute for getting what we were paying for and had delivered quite regularly before they decided to risk their very reputation on this poorly-executed cost reduction effort.

The final straw for me wasn’t another day of no delivery, but getting my Sunday edition actually delivered…on Monday. Enough already.

Of course, we’re still receiving the paper after canceling our subscription and with better regularity than when we subscribed. Such randomness in business is a sign of a lack of business controls that suggests there may be more problems underway than a failure to manage their delivery operations.

Here you have a classic example of what can happen when you attempt to cut operating costs without proper planning and thorough consideration of the risks to your business if things go awry.

Focus on VALUE Before Cost

It’s quite likely The Globe’s ill-fated  exercise in cost-cutting will cost them more in revenues and reputation  than it saves in expense. That’s a negative  ROI no matter how you slice it.

Which is what happens when you fail to consider the blowback that can occur when your cost-cutting alienates customers and clients, including your internal customers – your employees.

If your business would be enhanced by converting your employees into referral-generating ambassadors for new business – and who’s wouldn’t? –  then employing short-sighted tactics that save a few dollars at their expense is decidedly counter-productive.

And there’s absolutely no reason to be shady or ham-fisted in managing your business expenses, not when there are so many ways to reduce costs that are legitimate and beneficial to employees and customers, as well as your bottom line.

A leaner operation, after all, is usually more efficient and that can translate into products and services that are better, faster, and cheaper – a win-win for the business and its customers alike.

Smart Cost Reduction

Like  most things in business, there are smart and not-so-smart ways to reduce expenses. Here are a few examples of the former:

  • Tax credits are far more broadly available than most businesses realize, and not just for energy improvements. Hiring disadvantaged employees – veterans, the disabled, low-income and other disadvantaged populations – may be eligible for tax credits, as can many product and process improvements many businesses undertake simply to remain competitive. None of these are damaging to your business and none risk backlash of any kind since they’re encouraged by the IRS.
  • Other tax savings are possible with cost segregation studies of company-owned buildings and land improvements. And these are even recommended by the IRS as long as they’re implemented by qualified engineering experts.
  • Most every business overpays for much of their credit card merchant processing fees and workers comp insurance premiums due to the various errors and misclassifications that occur with these  vendor services.  Our team of specialists in these areas routinely save clients 10-20% and more in these recurring fees and expenses.

                      Risk-Free ROI

These can all be explored risk-free, with no fees required if savings aren’t found. In the case of cost segregation studies, for example, the fee to accelerate depreciation of select building components that lowers taxable income is capped at 10% of savings.

That translates into a risk-free 10:1 ROI.  Try matching that kind of return anywhere else among your business opportunities.

Best Value Not Always Lowest Cost

The Globe’s delivery debacle illustrates the folly of mistaking lowest cost for best value.

Don’t make the same mistake when it comes time to lower your business costs – which should, of course, be right away if you’re employing sound business principles.

Just be sure not to confuse lowest cost with best value. The difference could make or break your business – a lesson The Globe is learning the hard way.

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