Plan Before the Tax Return Is Due
Year-round tax planning gives business owners time to evaluate current results, expected income, proposed transactions and filing obligations before relevant deadlines. Return preparation reports completed activity and can also involve permitted return elections or contributions made after year-end. Each option has its own eligibility and timing rules; IRS Publication 560, for example, distinguishes retirement-plan adoption and contribution deadlines.
CPA Firm South Florida provides year-round tax planning and business advisory services for new and existing clients in Fort Lauderdale, throughout South Florida, and virtually. The appropriate work depends on the client’s entity, owners, income, records, transactions, states, and goals. Reviews are scheduled when the facts warrant them rather than promised on a fixed quarterly timetable.
Tax planning is a separate engagement from tax-return preparation. The proposed scope, records needed, timing, and fee are discussed before work begins.
What Year-Round Tax Planning May Include
A planning engagement can address one defined question or several connected business and owner issues. Depending on the engagement, our work may include:
- Tax projections: Estimate federal and applicable state tax using current information and reasonable assumptions about the remainder of the year.
- Estimated-payment calculations: Review payments already made, withholding, expected income, and the timing of future estimated payments.
- Entity and tax-election review: Examine how the business is currently taxed and whether an available election warrants further analysis.
- Owner compensation and distributions: Review wages, payroll, draws, guaranteed payments, distributions, and owner basis when relevant to the entity.
- Retirement-plan tax coordination: Evaluate the tax timing and reporting considerations of contributions in coordination with the client’s plan provider or financial professional.
- Multistate tax planning: Identify business activity, employees, property, owners, or transactions that may create filing or payment questions outside Florida.
- Cash-flow projections and financial forecasting: Connect expected operating results with tax payments and other known cash requirements.
- Business advisory: Discuss the tax and accounting effects of a proposed transaction before the client commits to it.
When a Tax-Planning Review May Be Useful
A review is often most useful when something important changes. Contacting the CPA before a transaction occurs may provide more useful options than waiting until the return is prepared.
- Revenue, profit, or owner income is materially different from the prior year.
- The business adds or removes an owner.
- An owner’s compensation, payroll, draws, or distributions will change.
- The company is considering a new entity or federal tax election.
- The business plans to buy or sell significant equipment, real estate, or another business.
- A large gain, loss, bonus, contract, or other unusual transaction is expected.
- The company hires employees, opens a location, or begins substantial activity in another state.
- The owner wants to evaluate the tax timing of retirement-plan contributions.
- Cash-flow changes may affect the ability to make estimated tax payments.
- A prior-year return, IRS notice, or state notice reveals an issue that should be addressed prospectively.
Tax Projections and Estimated Payments
A useful projection starts with reliable year-to-date records and clearly stated assumptions. We may review income, expenses, payroll, owner activity, investment or other personal income reported by the client, withholding, payments already made, and significant transactions expected before year-end.
The projection helps evaluate both the total tax bill and the timing of payments. Individual owners’ estimates and entity-level taxes require separate calculations. S corporations can have entity-level tax in specified circumstances, while owners may also owe tax on pass-through income. See the IRS estimated-tax guidance for businesses and owners. A satisfied prior-year safe harbor may leave required installments unchanged even when the projected balance due increases; review the individual rules in Publication 505.
Entity and Tax-Election Review
The legal form of a business and its federal tax classification are related but not identical. For example, an LLC may be treated as a disregarded entity, partnership, or corporation for federal tax purposes depending on its ownership and elections. The IRS explains the federal default classifications for LLCs in its guidance on LLC tax classification.
An entity or election review may consider expected income, number of owners, payroll obligations, administrative cost, state activity, retirement-plan goals, distribution practices, and the owners’ broader tax circumstances. An election should not be presented as automatically beneficial. The analysis must account for both potential tax effects and the ongoing compliance work required after the election.
Owner Compensation, Payroll, Distributions, and Basis
How owners receive money from a business depends on the entity and the work performed. Wages, draws, guaranteed payments, distributions, loans, and reimbursements do not all have the same tax treatment. Poor documentation or inconsistent accounting can also create problems during return preparation or an examination.
A planning review may compare payroll records with owner activity, identify information needed for basis calculations, and discuss whether compensation or distribution practices require attention. Corporate officers who perform services can have employment-tax responsibilities; the IRS provides an overview of relevant considerations on its Paying Yourself page.
Retirement-Plan Tax Coordination
Retirement-plan contributions can affect business deductions, owner compensation decisions, payroll, cash flow, contribution deadlines, and employee obligations. Our role is tax coordination: evaluating tax and reporting considerations and working with the client’s plan administrator, benefits professional, attorney, or investment adviser when their expertise is required.
Investment management, estate planning, trusts, wills and wealth management are outside this tax-planning engagement. Coordinate those needs with the appropriate professional. The IRS publishes resources on retirement plans for small employers and self-employed individuals.
Multistate Tax Planning
Florida does not impose a personal income tax, but that does not eliminate Florida business taxes or another state’s filing requirements. A business may need a multistate review when it has employees, owners, customers, property, inventory, remote workers, or material activity outside Florida.
Multistate planning may identify questions involving income allocation, apportionment, withholding, estimated payments, entity returns, sales activity, or registration obligations. The exact requirements depend on the states and the business’s facts. State returns and related compliance work are separately scoped and carry additional fees.
Cash-Flow Projections and Financial Forecasting
A cash forecast schedules expected collections and payments. Revenue must be translated into collection dates, and expenses into payment dates. Include payroll, debt principal and interest, asset purchases, owner withdrawals and tax payments. Borrowing and distributions affect cash separately from operating profit; customer deposits and unpaid liabilities may limit the amount available to spend.
Keep book profit, taxable income and available cash as separate measures. State the forecast’s assumptions and revise it when actual collections, obligations or business plans change.
Records That Support a Productive Planning Review
The records needed depend on the question being analyzed. Common items include:
- Current year-to-date profit-and-loss statement and balance sheet
- General ledger, bank reconciliations, and current bookkeeping reports
- Prior-year federal and state tax returns
- Payroll reports and owner-compensation information
- Estimated tax payments and income-tax withholding
- Owner contributions, distributions, loans, and basis records
- Asset purchases, sales, financing documents, and depreciation records
- Expected revenue, expenses, transactions, and state activity for the remainder of the year
- Retirement-plan information supplied by the plan provider or administrator
Complete, reconciled records make projections more useful. The planning engagement should identify any records cleanup it includes. Confirm ongoing bookkeeping, payroll processing, sales-tax returns, amended returns, return preparation and representation separately. For preparation fees and included return-related cleanup, see the firm’s published pricing and scope terms.
How a Year-Round Planning Engagement Works
1. Define the Decision or Question
We begin by identifying what the client is considering, the relevant deadline, and the tax or accounting questions that need to be answered.
2. Confirm the Scope and Records
The engagement description identifies the work to be performed, information required, assumptions, timing, fee, and services that remain outside the scope.
3. Analyze the Current Facts
We review the available records, prior filings, entity structure, owner information, payments, and expected transactions that affect the analysis.
4. Discuss Available Options
Where alternatives exist, we explain the tax and accounting considerations, administrative requirements, and limits of the analysis. Legal, investment, or benefits-plan questions may require coordination with another qualified professional.
5. Revisit the Projection When Facts Change
Planning reviews are scheduled as needed. A material change in income, ownership, compensation, a proposed transaction, or state activity may justify an updated analysis.
Tax Planning, Tax Preparation, and IRS Representation Are Different
Tax planning evaluates current-year facts and proposed decisions before the final return is prepared. Tax preparation organizes and reports completed transactions on the required returns and schedules. Visit our small-business tax preparation pricing page for information about preparation scope and typical firm ranges.
IRS representation addresses notices, examinations, collections, appeals, or other tax controversies. If you already received an IRS letter, review our IRS representation services. Each service should have its own written scope so the client knows what is and is not included.
Frequently Asked Questions
Do you offer year-round tax planning to new clients?
Yes. CPA Firm South Florida provides year-round tax planning to both new and existing clients. The initial consultation is used to understand the issue and determine whether a defined planning engagement is appropriate.
Is tax planning included with tax-return preparation?
No. Tax planning is a separate engagement. Routine questions about a completed return may be included with preparation, but projections, entity analysis, compensation review, multistate planning, forecasting, and other advisory work require a separately agreed scope.
Do you require quarterly planning meetings?
No fixed meeting schedule is promised. Reviews are scheduled when needed based on the client’s facts, deadlines, transactions, and changes during the year.
Can tax planning guarantee that I will pay less tax?
No. A CPA can analyze available options and explain their tax consequences, but no particular savings or outcome can be guaranteed. Results depend on the law, facts, records, timing, assumptions, and actions ultimately taken.
Can you help evaluate an S-corporation election?
Yes, when included in the engagement. The review may consider expected income, owner services, payroll and compliance costs, compensation, distributions, retirement-plan considerations, state obligations, and the timing and eligibility rules for an election.
Do you provide investment or estate-planning services?
No. This service focuses on CPA tax planning and business advisory. When an issue requires investment, estate-planning, trust, will, legal, or benefits-plan advice, we may coordinate tax information with the client’s appropriately qualified professional.
Do you offer a free initial consultation?
Yes. CPA Firm South Florida offers a free 20-minute initial consultation. The consultation helps identify the issue, relevant deadline, records available, and whether a separate planning engagement should be proposed.
Request a Year-Round Tax-Planning Consultation
Do not wait until the return is being prepared to raise a transaction that may require advance analysis. Contact CPA Firm South Florida when income changes, a major decision is being considered, or an estimated-payment or cash-flow question arises.
CPA Firm South Florida
1041 W Commercial Blvd, Suite 201
Fort Lauderdale, FL 33309
Phone: (954) 200-3234
Email: [email protected]
Request your free 20-minute initial consultation.
About the Author
Peter Rudolph, CPA, is the managing partner of CPA Firm South Florida. He provides tax preparation, IRS representation, accounting, and year-round tax-planning services for individuals and businesses in Fort Lauderdale and throughout South Florida. Learn more about Peter Rudolph, CPA.
This page provides general information and does not constitute tax, legal, investment, or accounting advice for a specific person or business. Recommendations and engagement scope depend on the facts, applicable law, records, assumptions, timing, and the terms of a written engagement.