Don't wait until tax season to find out what you could have done differently.
Tax preparation looks backward. Tax planning looks forward. ESBS works with individuals and business owners to estimate tax exposure before year-end, model significant financial decisions, identify planning opportunities, and coordinate the tax consequences across businesses, investments, real estate and the individual tax return.
The goal is not simply to find deductions. It is to understand the financial decision, evaluate the tax consequences of available alternatives, and make informed decisions while there is still time to act.
What already happened?
The tax return determines how those completed activities are reported.
What are we considering doing?
The best time to discuss the tax consequences of a major decision is generally before the decision becomes irreversible.
Tax planning should not begin with a generic list of deductions. It should begin with understanding the taxpayer's current financial position and what is likely to happen before the end of the year.
We begin by understanding the client's current situation. Depending upon the engagement, this can include:
For business clients whose accounting is maintained by ESBS, current bookkeeping and financial information can become an important part of this process.
Using available year-to-date information and reasonable assumptions for the remainder of the year, ESBS can develop a tax projection. The projection may consider:
The projection provides a baseline before potential planning alternatives are modeled.
When a client is considering a significant decision, ESBS can model appropriate scenarios — no change, the proposed transaction, or an alternative timing or structure. The purpose is to understand how different assumptions could affect:
Good tax planning asks "what happens if?" before the transaction happens.
Where an appropriate planning opportunity is identified, ESBS can help coordinate the tax and accounting implementation within the scope of our engagement. This may include areas such as:
A projection prepared in June may no longer reflect reality in November. For appropriate clients, planning can be revisited as:
Tax planning is a process rather than a one-time calculation.
For a business owner, the business tax return and individual tax return are often interconnected. Planning should therefore consider the relationship between the company and the owner rather than looking at each filing in isolation.
Different business structures create different tax and administrative consequences. ESBS can review the tax implications of the client's existing structure and model appropriate alternatives when circumstances change. Situations may involve:
For owners of pass-through businesses and corporations, compensation can interact with payroll, distributions, business profitability and individual taxation. ESBS can review the tax implications of compensation within the context of the overall business and owner return.
A profitable year can create a significant tax obligation even when cash has remained in the business or has been reinvested. Planning can help estimate upcoming obligations so the owner can prepare for:
Major equipment purchases, capital expenditures and other business investments can have accounting, depreciation, cash-flow and tax consequences. Whenever practical, significant transactions should be discussed before year-end rather than simply discovered during tax preparation.
Business owners may have access to retirement-plan opportunities that interact with compensation, employees, business structure and tax planning. ESBS can evaluate the tax impact of appropriate contribution scenarios and coordinate with the client's retirement-plan provider or financial professional where necessary.
Clients owning several businesses should not necessarily plan taxes entity by entity.
ESBS can coordinate the tax information across multiple entities to understand the owner's consolidated tax position.
For S corporation owners, planning can involve the relationship among business profitability, owner compensation, distributions, shareholder basis, payroll, retirement contributions and the individual income tax return.
Owner compensation should be considered based upon the facts and circumstances of the business rather than a generic percentage or formula.
Distributions should be considered alongside shareholder basis and the company's overall financial position.
Losses, contributions, distributions and shareholder loans can affect basis considerations.
Compensation and plan design can affect available retirement contributions.
Pass-through income may create individual estimated-tax obligations even when the business itself does not pay federal income tax at the entity level.
K-1 income can create planning challenges because taxable income, cash distributions and estimated-tax obligations do not necessarily move together.
Taxable pass-through income does not necessarily equal the cash you received.
ESBS can incorporate expected pass-through income into appropriate tax projections when sufficient information is available.
Explore Partnerships & K-1sSignificant investment activity can materially change a taxpayer's projected liability during the year. Planning may consider:
ESBS analyzes the tax consequences of investment activity. ESBS does not recommend which securities to buy or sell.
Your investment adviser determines what fits the investment strategy. ESBS can help explain how a proposed transaction may affect the tax picture.
The tax result from a property transaction can depend upon much more than the difference between purchase price and sale price. Historical basis, improvements, depreciation, property use, suspended losses and transaction structure may all be relevant.
Explore Real Estate TaxBring the tax team into the conversation before the documents are final.
Business acquisitions and dispositions can create materially different tax outcomes depending upon the structure of the transaction. Potential considerations may include:
ESBS can assist with tax modeling and accounting considerations and coordinate with transaction counsel and other advisers.
Once a transaction is signed and closed, many planning alternatives may no longer be available.
Discuss a Business TransactionRetirement accounts can create significant tax consequences when money is contributed, converted, distributed or withdrawn. ESBS can analyze the tax impact of appropriate scenarios involving areas such as:
ESBS analyzes the tax consequences of a retirement transaction. Recommendations about which assets a client should own, or how a portfolio should be allocated, belong with an appropriately qualified investment professional.
Contact ESBS when you are considering or experiencing:
The earlier we know about a significant change, the more useful planning can be.
Projected based upon available year-to-date information.
Estimated based upon the assumptions used in the projection.
Applicable state exposure based upon information available.
Withholding and estimated payments.
Potential remaining liability or overpayment.
| Current Course | Scenario A | Scenario B | |
|---|---|---|---|
| Projected Income | — | — | — |
| Federal Tax | — | — | — |
| State Tax | — | — | — |
| Estimated Payments | — | — | — |
| Projected Balance | — | — | — |
A projection is based upon assumptions. As the underlying income or transaction changes, the projection should be updated. The figures above are illustrative placeholders rather than client data.
For business owners, tax planning is only as useful as the financial information supporting it. When ESBS maintains or has access to current accounting records, tax planning can begin with actual business performance rather than waiting until months after year-end.
This is one of the advantages of coordinating accounting and tax work within the same firm.
Explore Accounting ServicesThe lowest immediate tax outcome is not automatically the best business outcome. For business owners, ESBS can evaluate tax considerations alongside broader financial questions such as:
Tax efficiency matters. So do cash flow, profitability and the underlying economics of the decision.
Explore Business AdvisoryReview prior-year results and identify current-year changes.
Evaluate business performance and significant changes from initial assumptions.
Develop or update full-year projections and identify potential planning areas.
Finalize year-end projections and implement appropriate actions before applicable deadlines.
Prepare the return, compare actual results to projections, and identify issues to carry into the next planning cycle.
The frequency of planning depends upon the client's engagement and complexity. Some clients may need one annual planning meeting; others may benefit from periodic projections during the year.
Particularly owners whose income changes significantly from year to year.
Where several business returns ultimately flow into one individual return.
Especially when income, investments or transactions create variable tax exposure.
When purchasing, operating or disposing of investment properties.
When significant gains, losses, K-1s or foreign investments affect the return.
Business sales, acquisitions, property sales, retirement distributions and other significant events.
Effective tax planning does not begin with a list of "tax hacks." A strategy that reduces taxes but creates a poor business or financial outcome may not be a good strategy. ESBS's approach is to understand:
What are you trying to accomplish?
What are the financial consequences?
What are the tax consequences?
What alternatives should be evaluated before you act?
The objective is informed decision-making — not a deduction at any cost.
Tax planning frequently intersects with legal, investment, retirement-plan, insurance and transaction considerations. Where appropriate, ESBS can coordinate tax and accounting information with the client's other professionals.
ESBS remains responsible for the tax and accounting work within the scope of its engagement.
Related Services
Tax planning becomes more useful when current accounting, business entities, investments and individual tax information are considered together.
Use current financial information rather than waiting until the tax return is prepared to understand business performance and projected income.
Explore Accounting ServicesCoordinate owner compensation, distributions, business income and shareholder-level tax planning.
Explore S Corporation TaxIncorporate expected partnership income, losses and distributions into the owner's broader tax projection.
Explore Partnership TaxConsider acquisitions, depreciation, property sales, rental income and other real-estate activity within the taxpayer's broader planning.
Explore Real Estate TaxTax preparation reports what already happened. Tax planning looks at what is still possible to change. Understanding the difference can help clients get more value from both.
Business owners with more than one entity often have income, losses, and basis items scattered across several returns. Reviewing these returns together, rather than in isolation, can help catch items that a single-entity review might miss.
The tax treatment of a business sale often depends heavily on decisions made in the purchase agreement itself. Once the agreement is signed, many of those decisions are difficult or impossible to change.
A shareholder's tax basis in an S corporation is not the same thing as the capital account shown on the company's books. Confusing the two can lead to reporting errors.
Don't wait until the return is being prepared to ask what could have been done differently. ESBS can review the numbers, project the tax impact, and help you evaluate appropriate alternatives before you act.
The information on this page is provided for general educational purposes and is not individualized tax, accounting, legal, investment or financial advice. Tax consequences depend upon the client's particular circumstances, applicable law and the facts of the transaction. Tax projections are estimates based upon information and assumptions available at the time of preparation and actual results may differ.The information provided is for general educational purposes and should not be considered individualized tax, accounting, legal, or financial advice. Tax rules and reporting requirements depend upon individual circumstances. Please consult with an appropriate professional regarding your specific situation.
