I recently ran into an old client of mine who had moved out of state. When I asked what she was doing, she proudly told me that she had set up a store front income tax service. We chatted for a while, as tax preparers do, and she told me that most of her clients were small businesses or individuals. I mentioned to her that we had many of our clients incorporate or set up limited liability companies over the last few years. Her response to that was, “Oh, I would never do that, if they switched it would really hurt my business.”
I told her I didn’t understand because there are so many advantages out there for certain small businesses to be either an S corporation, C corporation or partnership. Along with the potential liability protection, I did not understand why not to recommend different forms of doing business. Her comment was, “We do not do corporate or partnership tax returns so if I told them to switch forms of doing business, they would have to go somewhere else to get their tax work done and it would cost me money.” Unfortunately, her clients did not know the possible tax savings they could be getting.
I couldn’t help but think what a disservice she was doing for those small businesses that should be entertaining different forms of doing business. The only thing I could say was, “Be on the look out for part time tax preparers.”
Larry Kopsa CPA
