How We Saved Our Client $732000 In Tax
The Client
Many times clients need us to pull a rabbit out of the hat, to do the impossible.
One such situation occurred with a client in the health care industry.
After many years of research and difficulty they finally perfected an anti-wrinkle cream that they could prove worked. They were one of the first to come out with something that is now a crowded space. In their first year of release they made more than $3m profit.
The money was actually in the bank.
What was the business owners’ Big Issue?
The owners were very happy with the success of their new product and the big profit they made.
But their big profit also meant a big tax bill of over $1,000,000.
The real problem was that if they paid $1m in tax they would not have the money for future R & D. They knew that to continue with their current success they needed to do research into new products.
So the real issues was how could they keep as much of this profit as possible to guarantee the future survival of the company.
How did we help solve the Big Issue?
We, Allan Mason, principal accounting advisor at Encore Accounting, and my team, spent the next 3 months fully dedicated to the cause of helping the client save as much money as possible from their profit to reinvest in the future success of their business.
Firstly …we reviewed the business situation, not just on paper by purely looking at the numbers, but by actively asking questions and listening to the business owners to fully understand the business and build the business case as accurately as possible.
Secondly… we reviewed the business activities and business structure to find creative ways to legally minimise the tax bill.
Thirdly… we then talked to other professionals and tax lawyers to see how to maximise the tax savings as much as possible.
The Result – a total of $732,000 in tax savings achieved
As a result our team at Encore Accounting and our business partners managed to reduce the client’s tax bill from in excess of $1m to $268k, a total saving of $732,000.
What was our client’s reaction?
Our client really appreciated our attention to detail and that we went the extra mile for them.
In short, they were ecstatic.
Even more importantly they went ahead and reinvested the saved money into a great cause – into AIDS research, trying to find an antiviral beta-blocker to cure AIDS.
What skills and knowledge were critical in securing the big win for our client?
We were close to our client’s business and worked with them as partners.
We see these 3 areas of knowledge and skills as critical for achieving the big result for our client:
- Depth and width of expertise in tax compliance and management, financial and management accounting, business structures and administration and business management.
- A holistic approach: a combination of creative accounting, business restructuring and lateral thinking, possible because of our long experience of some 30 years of resolving complex accounting business cases and working with diverse companies and prominent individuals such as Kerry Packer.
- Strategic Partnerships: working with highly knowledgeable and experienced professionals in our team, as well as in our extended partnership network, gives our clients access to bigger range of solutions for their business.
What can you do to make more money and keep it?
You may not have huge profit to save in your business but every dollar saved counts.
You work hard for your money, so it should work hard for you.
These are a few ways in which you can reduce your tax bill:
- Plan your tax savings early to save as much as possible – review your financials regularly and prepare income and profit projections;
- Have a plan for your profit or loss – yes, you need to plan for loss too – if you are losing money you have to consider your best options moving forward;
- Take loss-corrective or profit-maximising actions early – manage your business overheads, break-even points, pricing etc;
- Review your spending, investment and business structuring decisions;
- Get proactive help at any of the previous steps –
Chose an accounting partner who can work with you to enhance your business success – give us a call:
