Bring in the Professionals: Why You Should Hire a Tax Attorney for Your Small Business

Chad Silver

Chad Silver

Managing Partner of Silver Tax Group, author of the book "Stop the IRS". Practicing a variety of tax issues, regulations, laws and rights. Specializing exclusively on tax matters involving IRS audits, negotiation, settlements & compromises.

Share on twitter
Twitter
Share on linkedin
LinkedIn
Share on facebook
Facebook
Share on email
Share Via Email

Published On:

Last Updated On:

As the old adage goes, there are two certainties in life: death and taxes. Many business owners would add stress about taxes to that list. 

That’s because many Americans don’t have the information they need to file their taxes properly–or even a clue about where to start. 

A good tax attorney can save you many a stressful week (and many an expensive error). Here’s why your business should hire a local tax attorney, and how to find the right attorney for your business. 

What Is a Tax Attorney?

They’re not accountants, they’re not actuaries, and they’re not competitive, high-profile litigators. So…what is a tax attorney?

A tax lawyer, in simple terms, is a lawyer who helps clients plan and file taxes, as well as defending clients against any tax-related litigation. 

What Do They Do?

To be clear: a tax attorney is not an accountant, so they don’t help their clients prepare taxes. 

For starters, tax attorneys must stay up-to-date on any new IRS regulations or changes to existing regulations. In fact, they spend a great deal of their time researching discrete issues for their clients. 

They do this so that they can properly guide their clients through tax issues before they arise and help their clients establish their business in a way that won’t punish them when Tax Day comes knocking. 

They also defend their clients when any litigation related to taxes arises, such as tax fraud, and aid their clients through IRS audits. 

Reasons to Hire a Local Tax Attorney

Maybe you’re a numbers person. Maybe you think you know the essentials of taxes. Maybe you think it would be cheaper to manage your business without the help of a tax attorney. 

The truth is, where businesses are concerned, taxation is the one area where there’s almost no room for error. Penalties and interest are the minima you’ll have to deal with. At worst, you’ll be staring down an audit–or charges of tax fraud. 

Here are a few key reasons why an IRS tax attorney can be a major boost to your business. 

Time

One of the foremost benefits to your business? The time saved by bringing in a professional. 

Learning about your tax obligations is a full-time job in its own right. Learning about how those tax obligations have changed in the past year alone could occupy every minute of your time. 

The truth is, bookkeeping and tax obligations aren’t things you should learn on the job. You won’t have time to learn them properly, and you’ll have business costs from day one. The IRS knows this, which means they’ll be paying attention from day one. 

You need to hit the ground running. A good tax attorney can give you the momentum you need to stay on track. 

Taxes, Taxes, and Taxes, Oh My!

It seems glaringly obvious, but you need a tax attorney for…well, your taxes. 

At a minimum, you’ll need to deal with: 

  • Local taxes
  • State taxes
  • Employee taxes
  • Federal taxes

That’s on top of any special considerations, like if you’re a self-employed business owner. Never mind the extra tax considerations if you do business outside of the state in which you’re located, or international tax considerations. 

If all of that sounds overwhelming, a tax attorney is your saving grace. 

Business Income

It’s every business owner’s favorite i-word: income. 

Unfortunately, it’s the IRS’s favorite word too, and it comes in many forms

In general, the IRS refers to gross income, which covers property, services, goods, bartering, sales income, interest, and more. If you fail to report any of your pertinent income streams, the IRS will make your life miserable. 

Think extra taxes, penalties, and interest, to name a few. 

A good tax attorney can help clarify your reporting responsibilities and ensure that you report the right amounts in the right places. 

Business Deductions

Business tax deductions offer a particular kind of glee. You’re saving money on what you do every day. For example, did you know that you can get reimbursed for taking clients to meals? 

In order to take full advantage of the possible reimbursements available to you, you first need to know what they are. The best way to do this is to work with an experienced tax attorney. 

Alternately, you don’t want to take deductions that don’t actually apply to you or take unrealistically high deductions. Otherwise, the IRS will suspect something’s going on and you’ll be stuck with an audit all over again. 

Either way, you need a good tax attorney to help navigate your deductions. 

Changes

Let’s say you somehow manage to learn the tax code for one year. Good for you! That helps for the one year, but it won’t help for any year afterward.

The truth is, state and federal regulations change so often that it’s foolish to expect the tax code to stay the same from year to year. Plus, tax agencies like the IRS issue rulings on new components of the tax code throughout the year, so you have to stay on top of those as well. 

Unless you’re a tax attorney, it’s unlikely that you have the time or wherewithal to fully understand these changes and how they’ll impact your business. 

Ignorance Is No Excuse

On that note, as we previously stated, taxation is one of those areas where businesses have functionally zero leeway. You don’t want to be in a position of trying to justify a mistake with ignorance. If you win that fight, you would be the first person in history to do so.  

Ignorance is no excuse for failing to meet your tax obligations. A tax attorney can help you avoid the problem altogether. 

When You Need to Hire a Tax Attorney

Now that you know why your business needs a tax attorney, let’s talk about when you would need to hire one. Here are a few common examples that may apply to you. 

Starting a Business

Let’s say you’re just getting a new business off the ground. Congratulations! That means it’s time to get a tax attorney on the phone. 

A tax attorney can anticipate different taxation outcomes associated with types of business entities (such as sole proprietorship, partnership, S-corp, C-corp, etc.)

This means that they can help you avoid future issues with the IRS by helping you choose the structure that best suits you and helping you stay attuned to state, federal, and international tax regulations as they apply to you. 

International Business

On that note, if you have any intention of conducting business internationally, you need at least one good tax attorney in your corner. 

The tax laws and regulations vary widely between countries, so something that works in the United States may not work in Canada or Thailand or Germany. As before, ignorance is no excuse–if anything, it could get you into a giant maze of a legal mess. 

Save yourself a headache. Let a tax attorney help you set things up correctly from the beginning. 

A Dispute with the IRS

If you get a call from the IRS, your next call should probably be to a tax attorney. 

It’s true that less than 1% of tax returns get audited each year. But all it takes is the wrong form or a bit of missing information to get on the IRS’s list. 

The fact is, an IRS agent knows far more about the tax code than you will. And if you’re facing a protracted in-person battle with IRS agents, you need someone who knows the tax code at least as well as the IRS. 

Ideally, you should have a tax attorney on hand to keep you from having any issues with the IRS in the first place, but failing that, hiring an attorney to help your business whether an audit is a smart move. 

How to Hire a Tax Attorney

If it sounds like your business could benefit from a tax attorney, don’t wait until next month or the dregs of tax season to look for one. Get proactive about finding an attorney so that they can help you get on track before Tax Day comes knocking. 

Here are a few tips to help you hire the right tax attorney for your business. 

Find a Specialist

First, it’s vital that you find a tax specialist, not an all-purpose attorney. 

A jack-of-all-trades attorney may seem like a good idea at the outset because you can go to them with any legal problem, and they may be slightly cheaper than a specialist. 

The problem, of course, is that a jack-of-all-trades simply cannot have the depth of knowledge that a specialist does. And if you find yourself navigating a complex situation, you’ll always be better served by an expert in the field. 

Ideally, you should also try to find an attorney with tax experience relevant to your particular business. A corporate tax attorney, for example, may not know how to help a self-employed freelancer. 

Look for Experience

Once you’ve found a specialist, it’s a good idea to look into their experience. 

We’re not saying that an inexperienced but talented attorney couldn’t offer you the same quality of work as an experienced attorney. We’re saying that, on the off chance something goes wrong, you’ll feel better having an attorney that has done this before and knows how to handle the situation. 

Talk to potential candidates about how many years they’ve been practicing their particular area of tax law. Ask them if they write for any legal journals or offer expert support to other attorneys. 

Ask for References

Once you’ve narrowed down your options to a set of specialized, experienced candidates, it’s time to ask for references. 

An attorney could objectively be the best person in their field, but if other clients hated working with them, you’ll find the whole experience frustrating. 

Don’t be shy in asking your attorney for references, ideally a few clients they’ve helped in the past who are willing to speak to their skills and demeanor. The clients can’t tell you the details of their case, but they can certainly speak to the experience of working with that attorney. 

An attorney worth their salt should be able to provide you a few references–if they’ve done a good job, their clients will reflect this. 

You can also take a look at client testimonials–if an attorney is good at what they do, they should have at least a few clients willing to attest to their skill. 

Find the Right Personality for You

Finally, it’s important that you find an attorney whose personality is well-suited to your own. 

Remember, your tax attorney is going to spend a lot of time in your pocket, guiding you through processes that you may not find particularly enjoyable. That experience will be infinitely easier if you have a rapport and have complementary personalities. 

Keep in mind that what works for one person may not work for another. You may appreciate someone who gets to the point and lays it all out for you in plain English, while someone else may prefer a gentler approach. 

Helping You Conquer Tax Season

A good business attorney can make all the difference between an easy, breezy tax season and weeks of panic. There’s no reason to drive yourself crazy when you could save yourself the agony. 

We offer fair prices designed to maximize value for our clients because we know that you’ve got a business to run and no time to slow down. If you’re searching for a great tax attorney, click here to get in touch and find out more about how we can help your business thrive. 

Are you up-to-date on tax information?

Ready to secure your financial future? Subscribe Today For Tax Knowledge Tomorrow

JOIN 2,000+ OTHERS. YES, IT’S COMPLETELY FREE. ZERO SPAM, UNSUBSCRIBE AT ANY TIME.