Had lunch today with the managing director of a local mid-sized CPA firm and a business owner friend of mine. We all share the same belief that every business owner should make the best decisions for their business, maximize their profitability, and let their tax professional help them with legitimate, legal tax strategies. Running the business to minimize tax instead of increasing the return on investment did not make a lot of sense to any of us.
Are there situations when a business owner may choose to make an investment and benefit from a deduction at a certain point in time rather than wait? Of course, but that should be the second criteria in the decision not the first. There’s no shame in putting a lot of money in your pocket if you own a successful business. It’s also not a sin to pay taxes if you are being guided by an experienced tax pro.
This was quite refreshing to me because so many times, I have difficult conversations with owners who are concerned first with reducing the tax liability under the influence of their CPA. Is that why entrepreneurs get into business? I think not. It would be interesting to add up all of the cash expended by small business in the US every year with the only real purpose to reduce the tax liability.
It was certainly encouraging to hear the CPA’s perspective on this!