Every year, at least one of my clients will surprise me with something they did that will drastically affect their taxes and they didn’t tell me about it. Usually they did something like selling or buying a house, or they got married or divorced. That could mean they’ll get a nasty surprise when filing their taxes.
This year was no different, except it has much harsher consequences than even I had anticipated. This year one of my clients started a small business and didn’t tell me about it. By the time they called me to get their taxes done, there was nothing I could do to help them plan for the coming tax bill. A surprise tax bill of $5,000.00 is never fun, but this one cost them over $20,000.00!
Another client changed his LLC to an S-corp, just because his best friend had an S-corp, too. So he thought he should change his. What he didn’t realize was that it meant he had to do payroll. Again, he had a big tax bill that he was not prepared for.
You know I like surprises to a certain extent, but I don’t like ones that have a negative impact and could have been prevented. One simple phone call would have kept both clients from lots of pain simply because I could have prepared them for it and shown them ways to lower their tax bills. You cannot plan for something after the fact. It is best to be done before the event even occurs. But with the proper notice, we can often mitigate the surprises by simply putting a plan in place before the end of the year.
So, the next time you go out and buy a Big Red Semi Truck or plan to do something that affects your business, or when a life change such as getting married and buying a house happens, or even if something that you didn’t plan for happens, let me know as soon as possible. I would rather help you plan now for the tax consequences than give you another big surprise when we file your taxes.