Financial Sense with Jason Glisczynski
By Jason Glisczynski
Part 1 of 5: Leveling the Playing Field on Excessive Taxation
T recently published an article called “The Internal 5 for Manufacturers” and have been asked to follow up that article with a more in-depth look at each of the 5 most common challenges across the manufacturing space:
- Excessive Taxation
- High Insurance Costs
- Expensive Working Capital
- Talent Acquisition and Retention
- Suboptimal Business Transitions
In this article, I will tackle one of the biggest voluntary drains I see in a business or high-income earner: excessive taxation.
I say voluntary because most if not all taxes on a business are “voluntarily” paid by failing to deploy proactive planning or sophisticated strategies to mitigate the tax. According to ITEP (Institute on Taxation and Economic Policy) senior fellow Matthew Gardner, “These (Fortune 500) companies have a lot of tax avoidance strategies at their disposal.” (1)
While the strategies used by the companies to mitigate tax are legal, he states the obvious; large companies have more resources than smaller companies. “If you want to put blinders on you can view this as a level playing field, but when it requires such an investment of time, it makes {the strategies} unavailable for smaller businesses,” Gardner said (1).
When I start the process of helping a business or high-income earner reduce their tax liability I start by learning about the current tax plan. When conducting my discovery interview with the potential client It is common to hear statements such as—
“My accountant is super busy and doesn’t respond timely”.
“My accountant doesn’t give me fresh ideas or do enough proactive planning”.
This one is REALLY common:
“My accountant told me to go buy (equipment, vehicle, inventory, etc.) to get a write-off at the end of the year to reduce my tax.” This is the Section 179 tax trap, watch out!
This one truly takes the cake:
“My CPA/accountant is great! I’ve never been audited!”
Forgive me if this offends you, but this is like saying “Hey, I love this restaurant! I’ve been here a bunch and they have never given me food poisoning!”
Roughly less than 3% of businesses are audited, hardly a badge of honor or proof of doing good work. Not being audited is the minimum standard. So, what can you do to mitigate your taxes if you like your CPA/accountant but want to improve your results?
Going back to what Mr. Gardner said, it isn’t a level playing field for smaller (non-Fortune 500) companies, unless you have access. One way to access top-tier talent using peer-reviewed sophisticated strategies in a highly collaborative environment is to build a VFO (Virtual Family Office). After 10,000 hours and over $300,000 in research and development that is the only solution, I have found to give you an ideal outcome.
The great news is, you don’t need to fire the CPA/accountant you are working with so long as they are open to fresh ideas and working in a collaborative environment to serve you.
In my 27-minute Tax Mitigation Workshop I share with you a handful of strategies that, when deployed correctly within a virtual family office framework and properly executed with collaboration across multiple disciplines, can significantly reduce or possibly eliminate taxes.
The playing field has been leveled, the question for you is are you going to get in the game?
Jason Glisczynski is co-owner and principal advisor for Silvertree, LLC. He is a CERTIFIED FINANCIAL PLANNER™ Professional and a Certified Private Wealth Advisor Professional, and specializes in working with business owners, executives, and workers in manufacturing.
Investment Advisory Services offered through Brookstone Capital Management (BCM) LLC, a Registered Investment Advisor. Silvertree, LLC and BCM are separate companies. Visit www.silvertreeplan.com for more information.