Tax Savings Strategies for a Product Service Company

Challenge

A growing product service company has been providing product solutions and services for its customers for years. The company lacked proper outside financial business counsel and was facing significant and unnecessary tax liabilities as a result.

Solution

In order to maximize the client’s tax savings, Machen McChesney began the engagement process by conducting a highly technical and thorough evaluation of the tax laws and operational concerns impacting the business.

Following the evaluation, our team was able to:

• Change the way the client recognized revenue and by deferring their tax liability, enhanced cash flow and more accurately matched revenue and expenses
• File sub chapter S elections for the client’s entities
• Implement assistance generating accurate accounting records, training accounting staff, and periodically reviewing internal financial statements with client
• Present the client with a list of tax and business planning ideas to prioritize and implement

Results

The company’s tax liability was permanently reduced $48,000 and reduced approximately $45,000 each year going forward. The change in accounting method allowed an additional tax deferral of $99,000.

Periodic tax and business planning meetings are held, giving management a much clearer understanding of the company’s financial position on an ongoing basis, as opposed to just an annual basis, thus allowing them to be proactive and better manage day-to-day operations.