By Jamie Waggoner
It is a fact of life that most small businesses fail.
As a tax professional, you will see up close and personal what a failed business looks like, and the messes it can create.
What can you do to help a tax client whose business has failed?
4 Simple Steps To Help A Failed Business
First of all, your client with a failed business needs empathy, they are going through a world of hurt and need someone to tell them, “I understand, I have been there.”
This is a time when your client is at their most vulnerable and you don’t want to make their day worse.
Just listening and empathizing with the person is the first step.
Next, be practical and provide a check list for your business client on how and what to do about closing their business.
They need your guidance to help close their business properly.
You are there to make sure nothing else goes wrong especially financially because your client has already lost a lot.
If you don’t dissolve the corporation properly and do other closing steps, for example, it can come back to haunt the business owner with a bunch of more letters and penalties.
You need to have a checklist on hand for helping someone close a business.
You also can consider charging for this as a service if you do the work of fulfilling the checklist.
Making the Most of the Loss
Taxes have so many elements of “reverse psychology.”
For instance, in taxes, if you lose money, it’s actually a good thing.
Because that loss could deduct against your other income and reduce your tax.
If someone just lost a lot of money on a failed business, they may be wanting to “forget about it.”
But you, as the tax professional, should be hunting for ways to use that loss to their advantage.
A Net Operating Loss (NOL) is one possible method for turning a loss into a good thing.
Death Is a Part of Life
No one wants to go through the horror of a failed business, but it happens all the time.
As a tax preparer, it is your job to be there for your client when something like this happens.
You will be there to assess the damages and make sure more damage doesn’t come about on your watch.
You must be the kind of tax professional who’s very serious about your craft if you’re reading this article.
If that’s you, are you already a member of the Business Tax Verified Training Program with CPA Adam Shay?
That’s the new comprehensive training program from Pronto Tax School where it shows you all kinds of tips and tricks for working with corporation, S corporation, and LLC tax returns.
That training program is not for everyone because it’s more advanced.
But if you want to work with business owner tax clients it will save you a lot of money and hassle. Check it out now.
More Articles on Our Tax Programs For Business
- Corporate Tax Returns (Answering Questions on Who you Call)
- Are You The Kind of Tax Preparer Business Owners Want?