Business consulting and strategic planning with the tax in view

Business consulting here means looking at a business decision through what it will do to the owner’s filings and the IRS account. The old site listed “business consulting” and “strategic business planning” as separate services. This page treats them together, because both come down to the same question: what a decision obliges the business to file, deposit or register, and when.

Tyrone J. Taylor holds a BA in Economics from the University of California, Santa Cruz, and an MBA and a Master’s in Accountancy from the University of Phoenix. He has also spent more than 13 years as an Enrolled Agent seeing what happens to businesses whose plans left the tax out. The firm’s IRS collection cases are the other half of that experience.

What a consulting engagement covers is agreed with him directly. The old site gives the services’ names and nothing more, and so this page claims nothing further.

Most growth decisions bring a filing or deposit obligation with them, and the dates arrive whether or not anyone planned for them.

• Hiring the first employee. Form 941 every quarter, deposits by electronic funds transfer on a schedule chosen before each year, and Form 940 for federal unemployment tax.
• Forming or registering an entity. Tennessee’s $100 minimum franchise tax every year once the entity is registered through the Secretary of State.
• Passing $100,000 in gross receipts. Registration for Tennessee business tax, state and, where the city has one, city.
• Selling into Tennessee from another state. State business tax for an out-of-state business with substantial nexus that delivers services or ships goods here.
• Owner draws without withholding. Estimated payments for the owner’s own federal tax.

The new business formation page covers the start-up registrations in more detail.

Planning keeps a business out of collection mainly by making sure cash set aside for taxes isn’t spent on growth. Withheld payroll tax is the most dangerous money in a business to borrow from, because if it goes unpaid the IRS can assess the Trust Fund Recovery Penalty against the people responsible, equal to the full unpaid amount. Using available funds to pay other creditors first is treated as a sign of willfulness.

For income tax, the risk is slower. The failure-to-pay penalty adds 0.5% of the unpaid tax each month, up to 25%, with interest on top, and a balance that sits long enough ends up in front of ACS or a Revenue Officer. A plan that sizes estimated payments and deposits against the year’s real cash flow is the cheapest version of the work the firm does after the fact.

A business that already owes the IRS has to plan around what the IRS will accept, and the IRS looks first at current compliance. An Offer in Compromise is not considered unless the business has made its federal tax deposits for the current quarter and the two before it, and an installment agreement can be terminated when a new tax liability goes unpaid.

Big decisions also show up in the IRS’s arithmetic. Business assets count toward the minimum offer at 80% of current market value less loans, so selling equipment, taking on debt or moving cash between entities changes the figure an offer is measured against. Those decisions are worth timing with the Offer in Compromise rules in view, and sometimes with a business valuation in hand.