Momentum first, compliance second (Quick Tip!)
Very often, I’ll get calls or emails from prospective clients asking me how to construct the perfect tax planning strategy to meet their needs. Usually, they start off the call with a very excited introduction into their business plan but then the conversation quickly shifts to a deep level of concern about how the impact of taxes and compliance requirements. Then from concern, the clients start to explain their fears that just making the wrong move or wrong misstep can cause them to lose their entire fortune overnight because the IRS or some state agency will seize their entire pool of assets.
This is going to sound very non-accountant of me, but unless you’re starting off a business backed by investors or venture capital, I’d actually recommend setting aside much tax/compliance planning in your startup until after you’ve started to build some momentum and actually have a business that’s viable and worth planning around. Focus on generating revenue first and when the time comes (and I swear, you’ll definitely know when it’s time to engage with an accounting firm) to get your tax plan in order, you’ll be happy knowing at worst, you lost a little bit of tax efficiency to gain clarity and state of mind to actually do what’s most important, which is make your business profitable.
What I’ve seen too many times is a situation where the taxes and compliance strategies were over planned at the very high expense of attorney, accounting, and state compliance costs for a business that never generated a single dollar of revenue. Let’s avoid that, build your momentum first and I promise you we’ll get to the compliance and tax planning activities.
-Stephen Morris, CPA, MBT, CCIM
