Shhh. Keep it down. I don't want everyone to know. I’ll just tell you if you can keep it to yourself. There's a sure fire way to pay next to no tax and I'm going to tell you how.
Shhh. Keep it down. I don't want everyone to know. I’ll just tell you if you can keep it to yourself.There's a sure fire way to pay next to no tax and I'm going to tell you how. For free. No complicated structures, tax havens or offshore entities required.
You might not understand it at first. But I'll try to keep it simple.
The secret is: Make less money! Less revenue! More costs! Best case situation is profit = nil. No tax = success! Not as hard as you thought right?
Most accountants raison d'etre is to save you tax. It's the job isn't it? That's why you pay them thousands a year.
Only thing is - I think as an industry we've got it backwards. What about if I said I want my clients to pay as much tax as possible? Heaps of it. Oodles even. You're probably thinking you're glad you aren't a client about now - but bear with me.
The truth is nobody ever got rich by having a low tax bill. Well fine I guess some companies sure get a boost from not paying much (here's looking at you Google and Facebook). But having less costs (be they staff, paperclips or tax) is rarely a way to get properly ahead. It doesn’t grow your business one bit. And yet it’s what many accountants spend all their time doing looking at!
A typical set of financial statements from the accountant has one line for sales and about 400 lines for expenses. The excuse that it's what the IRD needs isn’t good enough any longer. Any muppet can compare costs year on year, say that profits are down partly because vehicle costs are up and nod sagely. You should expect more than that from your accountant.
I believe the value in a relationship with your accountant starts with them understanding the drivers of your business (i.e. what specific metrics can be worked on to increase profits). Your accountant should know the key performance indicators of your business and help you work them to your advantage. Then you can eventually pay loads more tax with all your extra profits.
Most SME businesses would run better with an accountant who is 80% business advice and 20% tax. Unfortunately, it’s usually the other way around. Realistically, often the accountant has only ever run an accounting business rather than anything a bit more hands on.
Sure you might be in the small percentage of businesses that need a proper tax specialist rather than a stock standard Chartered Accountant. But if you're one of those businesses, then get that expert advice just for the tricky stuff and then use a good accounting business partner to help your business get ahead. Paying a tax expert to help you understand why widget sales are down may not end well.
The world has changed. Good accountants haven’t been hidden away in dark rooms bending over the tax code for quite a long time. If yours is still stuck in the weeds minimising tax - instead of helping you pay more - then it might be time for a new direction.