4 ms·

I also look at it from a liability perspective. I pay a marquee accounting firm such that big government will likely never second guess its accurate & legal. (A

I also look at it from a liability perspective. I pay a marquee accounting firm such that big government will likely never second guess its accurate & legal. (And if they do I have recourse on the firm.) If you're making 6+ figures, you should be treating your business like a corporation and paying a firm to do your bookkeeping. Especially true if your the only employee because in some countries single-employee corporations can be re-assesed and taxed at a much higher rate.

mindslight 4y ago
The idea that you would have recourse against the accounting firm is specious. That's exactly why they have you sign something that says they've only prepared based on what you've told them. From their perspective, everything they've filed is fully congruent with what you've told them - think of them like a more advanced TurboTax. So the only benefit is that you can attribute errors to a misunderstanding, rather than your own singular willfulness. But if your goal isn't to commit tax fraud, then you probably don't need plausible deniability. I just dealt with a tax auditor from my state, over something my CPA judged as a toss-up, and it really wasn't was bad as you'd think. To interact with them, my CPA wanted explicit direction for what to do (handle the initial phone call for me, and fish for details of what they actually want). Next, they referred me to the most knowledgeable attorney at a prestigious regional legal firm: "You likely don't have an argument, be happy if they don't come after more. If you really want I can represent you in tax court for a $10k retainer". I decided to represent myself, typed up a few statements outlining the details and my position, and sent them in. A few weeks later, I had a phone call with the auditor and their manager where they immediately proposed that based on the details I sent they could meet me half way. I verbally agreed, the manager seemed content to have a quick amicable resolution, and a few weeks later I got the formal assessment notice with a bit of interest (no penalties). I considered that a major win given what I was staring down. A++ would get taxed again.
codegeek 4y ago
"I have recourse on the firm" Don't know about your firm but for our 7 figure business, I was paying a firm 6k+ just for taxes (no help with anything else, no strategy on tax savings) and they all make you sign a 0 liability thing. Ultimately, it is on YOU if you screw up your taxes and not the tax preparer. Fraud may be an exception but unless you can prove that, IRS will ultimately hold you responsible for mistakes, not the preparing firm. I bet you are signing that fine print somewhere.
- fbdab103 4y ago
  Even if there is no true protection, I look at it that the professional is less likely to make a mistake than myself. If I make a mistake that later requires further review/justification, that is a true loss.

mindslight 4y ago

The idea that you would have recourse against the accounting firm is specious. That's exactly why they have you sign something that says they've only prepared based on what you've told them. From their perspective, everything they've filed is fully congruent with what you've told them - think of them like a more advanced TurboTax. So the only benefit is that you can attribute errors to a misunderstanding, rather than your own singular willfulness. But if your goal isn't to commit tax fraud, then you probably don't need plausible deniability. I just dealt with a tax auditor from my state, over something my CPA judged as a toss-up, and it really wasn't was bad as you'd think. To interact with them, my CPA wanted explicit direction for what to do (handle the initial phone call for me, and fish for details of what they actually want). Next, they referred me to the most knowledgeable attorney at a prestigious regional legal firm: "You likely don't have an argument, be happy if they don't come after more. If you really want I can represent you in tax court for a $10k retainer". I decided to represent myself, typed up a few statements outlining the details and my position, and sent them in. A few weeks later, I had a phone call with the auditor and their manager where they immediately proposed that based on the details I sent they could meet me half way. I verbally agreed, the manager seemed content to have a quick amicable resolution, and a few weeks later I got the formal assessment notice with a bit of interest (no penalties). I considered that a major win given what I was staring down. A++ would get taxed again.

codegeek 4y ago

"I have recourse on the firm" Don't know about your firm but for our 7 figure business, I was paying a firm 6k+ just for taxes (no help with anything else, no strategy on tax savings) and they all make you sign a 0 liability thing. Ultimately, it is on YOU if you screw up your taxes and not the tax preparer. Fraud may be an exception but unless you can prove that, IRS will ultimately hold you responsible for mistakes, not the preparing firm. I bet you are signing that fine print somewhere.

fbdab103 4y ago
Even if there is no true protection, I look at it that the professional is less likely to make a mistake than myself. If I make a mistake that later requires further review/justification, that is a true loss.