What does an ounce of prevention is worth a pound of cure mean in the context of corporate tax?
Pretty simple, it means planning. The shareholders expect management to have a tax strategy and to execute on it.
The problem is there are as many tax strategies as there are businesses!
Here’s an example…
- One company wants effective tax rate management using an IP holding company structure.
- The company across the street is more concerned with preserving cash by maximizing credits.
- The company next door wants to make sure they’re in good standing in every state in which they have employees so they can close a financing.
How does management assemble all these pieces to accomplish a company’s goal?
By talking and by listening. Because there are so many variables, each answer is custom…or maybe customized.
It is easy to repeat past mistakes due to a lack of understanding of corporate tax.
Yes, you may have had an offshore tax structure at a previous company, but that was then… and this is now. Your prior employer may have been in an IPO path, but this company is more of a buy-out candidate.
No two situations are alike.
A tax strategy is not a succession of studies by your accounting firm. You may feel safe because you have lots of reports by Big Accounting.
But don’t kid yourself.
You’ve bought the pound of cure without really investigating the cost of the ounce of prevention.
Take control of the agenda. It’s about your company’s needs, not your accounting firm’s products and availability.