The Most Common Tax Cut Mistakes Successful Entrepreneurs Make

If you have amassed a significant amount of wealth, you may be recognizing federal and state income taxes as your biggest potential expense. Why a “latent” cost? Some people understand the many ways they can be mitigated.

Founder and principal consultant of PJ DiNuzzo, CPA, PFS, MSTx, MBA, and DiNuzzo Middle-Market Family Office, and Wall Street Journal bestselling author, according to the book: DiNuzzo Middle-Market Family Office™ breakthrough: creating strategic tax, risk cash flow and lifestyle options for private company owners and wealthy families. When Don’t let taxes kill you: 20 most common reasons to send large amounts to the IRS“The most typical problem these entrepreneurs face is paying too much income tax. And after experiencing the frustration of overpaying taxes, they reach out to discuss tax savings. It’s amazing how many gaps, holes, missed opportunities and potentially untapped opportunities there are in the industry.Having worked with successful privately held business owners and wealthy families since 1989, I’ve found that there are four main reasons why so many entrepreneurs fail in their tax saving and tax planning efforts.”

Here are four issues identified by PJ DiNuzzo…

Problem #1: Successful entrepreneurs exceed the capabilities of some, most, or all of their current advisors.

Most advisors typically serve clients with net worths between $1 million and $5 million. The “toolbox” utilized by these advisors is grossly inadequate to offer solutions in the $10M to $250M net worth space.

The main reason entrepreneurs maintain these relationships is that they are comfortable. They have been working with advisors for many years, even when their income was low and they needed few tools. That’s understandable, but this comfort is the least of the money they’ve ever accepted, as missing out on tax relief opportunities often results in hundreds of thousands, and possibly millions, of dollars lost annually. may be the most expensive recursive “comfort” or indecision.

Issue 2: There is no handbook or roadmap for effective tax relief for successful entrepreneurs.

Many ultra-high net worth individuals are served by high-performing multi-family offices. They are not interested in moving this far downstream to provide all their services and expertise. On the other hand, many financial advisors and wealth managers want to move “upstream” and profit from wealthy clients, but when trying to serve more successful groups of entrepreneurs, they typically It gives me a headache.

Successful private business owners with personal income above $1 million or net worth of $10 million or more need a higher level of service with no “handbook” or “roadmap” available . Therefore, less competent financial his advisors and wealth managers fail to adequately serve their entrepreneurial clients and frequently overpay federal and state income taxes.

Problem 3: Successful entrepreneurs often make too many “one-off” capital decisions.

Most successful entrepreneurs make a series of one-off decisions without the guidance of a competent professional who understands the rules of the ultra-high net worth and has access to the entire appropriate toolbox needed to reduce their income tax burden. will be lowered.

These entrepreneurs are busy, have longtime core advisors, and often turn to outside experts for help as topics and needs arise that are outside their scope. Even when they find “help,” they often come across people who can’t help enough. These professionals cannot provide elite wealth planning services.

Issue 4 No coordination among experts.

Most of the professionals that successful entrepreneurs work with are focused only on what they are doing. There are no regularly significant adjustments to optimize tax relief. By carefully coordinating the right internal and external experts, we are able to identify available and viable tax relief opportunities for each entrepreneur. Once options are presented and entrepreneurs decide which opportunities they want to pursue, tax relief efforts are implemented.

Unfortunately, even experienced professionals often fail to coordinate with other professionals. As a result, this can lead to mistakes, underserved clients, and ultimately missed opportunities for significant tax reductions.

Russ Alan Prince He is Executive Director of Private Wealth Magazine (pw-mag.com) and Chief Content Officer of High-Net-Worth Genius (hnwgenius.com). He consults family offices, wealthy and fast-growing entrepreneurs, and hand-picked professionals.