When you are getting ready to do your taxes, business or personal, picking the right TYPE of tax professional is part of the financial equation. Business taxes are not one-size-fits-all all affairs and sometimes you might need more than one kind of tax professional. Specialists can save your business money because they focus on particular tax issues. You wouldn’t go to a podiatrist for a heart condition; business tax professionals have expertise as specific as medical professionals.
The first type of tax professional we think of when we have our taxes done are CPAs, and Certified Public Accountants. You will see the term “tax preparer” used. Tax preparers are not the only type of tax professionals. There are also: tax credits & incentive specialists, state/ local tax specialists, international tax specialists, sales & use tax specialists, and tax attorneys.
Tax credits & incentive specialists (and this is an area of specialization for Hito) work on finding opportunities for businesses to lower their tax burden via credits and incentives from Federal, state, and local government. It is not uncommon for such credits and incentives to be ignored or underused by businesses–especially small to medium-sized businesses. Not every accountant has expertise with these potential credits. Not taking advantage is leaving money on the proverbial table. The Employee Retention Tax Credit is an example of a Federal credit that was underutilized. Credits include:
- Job tax credits
- Research and Development credits
- Investment credits
- Training tax credits
State/ local tax specialists help businesses with state and local tax matters. Yes, this is obvious but such taxes–especially for businesses–often differ drastically from Federal taxes. Likewise, the rules are often wildly different between states and local jurisdictions. Business doesn’t usually stop at a city boundary or county line. It is also true that many CPAs do not focus specifically on these issues. Oregon’s Enterprise Zones are examples of a potential tax benefit for businesses. These zones are geographic areas where specific tax incentives are available.
In some cases, these are aimed at particular groups. Some Oregon Enterprise Zones aim to help Native American tribes in the state. Other states offer incentives that bring “high-quality jobs.” There are innumerable variations.
International tax specialists, unsurprisingly enough, deal with international taxes. If your company does business outside the USA income may be subject to the tax laws of other countries or international treaties in addition to the US requirements. Most International tax specialists deal with US taxation related to the company having a foreign presence. Taxation for such companies is different and complicated. The potential issues are innumerable and change from country to country, jurisdiction to jurisdiction. An example of an issue businesses must deal with are the global minimum tax which goes into effect in 2024. A good description of the origins is HERE and where we stand now HERE. This example is, of course, more important to larger international companies.
Sales and use tax specialists are accountants specializing in compliance with sales taxes. Again, these taxes vary by jurisdiction. Even within states, there can be differences in state taxes. Businesses of all sizes are well-advised to be sure their sales tax returns are accurate. There are even instances where sales tax can apply to a business without a physical presence in the state due to e-commerce and affiliate sales. The Supreme Court, in a 5-4 decision, found that a state may require state taxes to be collected even when the seller is not in the state. Who pays and who doesn’t is not simple. South Dakota V. Wayfair changed interstate business.
Tax attorneys provide legal advice on tax issues that go beyond what a CPA can comment on. They can also, being lawyers, represent a client in court. Ideally their advice and assistance in planning prevents a business from winding up in court in the first place.
Every business’ tax issues are different based on what they do, where they do it, the credits and incentives from various jurisdictions where they operate and many other factors. When you hire a lawyer you do not call a criminal defense attorney to help you buy a building. If you break your toe you do not contact your cardiologist. Your business’ tax needs also require a diverse group of tax professionals to maximize profits and take advantage of benefits you may not know are available.