Tax Advisor for Business – In this guide, you will learn everything about working with a tax advisor. Starting with the risks, what happens if you choose the wrong tax advisor for your business? Plus tips on how to find good tax accountants. Then a look at the tasks involved, from bookkeeping, to wages and salaries, to annual accounts. Lastly, a look at working together, what are your responsibilities? If you have learned a lot about taxes and advisors, let’s take a look at the costs and the fee table for tax advisors. After all, taxes are always a combination of the information you give the tax advisor and what he or she does with it. Taxes in Germany, taxes in the USA? Even in growth, the tax office is your companion, around legal forms, tax systems and tax avoidance. Our guide: Find a tax advisor. Learn from our experience.
Duties: What does a tax consultant
Before we go into the matter of tax advisors in detail here, on the special tasks, risks in the selection of tax advisors, as well as tips and the “daily” work with the tax advisor. First, a very general look at the core areas that tax firms cover. This includes accounting, financial accounting, all payroll accounting and payroll for employees, plus other tasks.
What does a tax accountant do simply explained?
7 typical tasks of tax consultants in companies:
- Advice on tax preparation and structuring
- Bookkeeping and financial accounting
- Payroll accounting and payroll
- Profit and Loss Account (EÜR)
- Tax returns (much more on this later)
- Audits of tax assessments
- Representation vis-à-vis tax office and court
Compare tax accountants: The 3 biggest risks
Are you looking for a good tax consultant nearby? In fact, the choice of tax advisor has long-term effects, because the collaboration is very intense.
Intensive, regular cooperation
After you sign, you are bound to the tax office in financial and tax aspects, from levies to queries, almost every week. Likewise for the payrolls, the advance VAT returns and, of course, for questions about tax structuring. The cooperation is therefore intensive, especially with small companies, self-employed and companies in growth, where many tasks are still done by the management itself.
Accordingly, a change of tax firm is not possible overnight. Companies are very closely intertwined with their tax advisor, through regular and intensive cooperation.
Monthly cost load
Tax accountants do not work for free, accordingly, your business will incur monthly costs.
- Management costs
- Cost per employee
- Additional costs for consulting, testing, etc.
So, the tax consultant costs, more about this later, consist of 3 parts. First, the monthly accounting, it is charged according to the official fee table (later under “Costs”). This means for you, the higher your turnover in the company is, the more may be charged by your tax consultant. In addition, there are costs for the payroll of your employees in the second step. Each employee is charged extra. In the third step comes all that is apart from accounting and employees: additional questions, audits, documents, even the annual financial statement, all this costs money and by time. The hourly rates of your tax advisor, but also of the employees, are also on the invoice at the end of the month.
Losing money due to insufficient advice: training and motivation
The training to become a tax consultant is done relatively quickly, a course with about 200 hours, in the full-time seminar 2 to 4 months. After that comes an exam. This means that many tax consultants learn standards, not tax design.
Many tax advisors are therefore rather tax auditors
You take over the account assignment, bill employees properly and carry out the annual financial statement correctly. The question: Is that enough? Depending on the company, goals and scaling, a tax consultant should possibly bring more.
Lack of advice involves 2 risk factors, on the one hand losses due to missed advice (tax tips, structuring options) and at the same time risks due to too much advice (cost-benefit factor). Because, as you have learned, every additional minute is billed. Suddenly the monthly costs are no longer 400 Euro, 500 Euro or 800 Euro, suddenly there are 4,200 Euro on the bill for the current month, due to the many consultations and work paths (procurement of documents by employees up to examinations and the consulting time itself).
Especially for companies at the beginning, this can be a cost trap if the tax firm is not absolutely reputable. Until owners and managers notice this mistake, as I said, we are talking about small companies, years can pass. Then the costs have already exploded.
Paying tax means losing profits
Did you know? For many companies:
Taxes are the largest cost factor in the company
Speaking of which, what is actually your biggest, monthly expense (once you’re in the 5/6 figures)? Rent? Staff? For the majority of businesses, taxes are actually the biggest cost factor, looking at business tax, capital gains tax, etc. Accordingly, the quality of the advice you get from your tax advisor makes a lot of difference.
The following calculation example is intended to show how costs add up, also through overpaid taxes and through follow-up costs, since the missing money cannot be reinvested to generate more money.
Calculation example: costs and lack of reinvestment
Already 200 euros of additional losses due to lack of advice become 2,400 euros a year. To the losses, by too much taxes, come the costs for the tax consultant (additional services for advice). Even at 1 hour per month, say at a rate of 120 euros, you are again at 1,440 euros. Monthly 320 euros that can not be reinvested, so bring further follow-up costs: You are missing money for investments at the beginning. Every euro that is missing cannot be doubled by wise investments.
Even if after 3, 4 years you realize that the work is not good, how will you check after the fact, which bill was justified, which were not? So do without it and just change the tax advisor.
Keep this in mind if you want to hire a tax professional.
Checklist of the 3 biggest risks
Summarizing 3 risks once again:
- Intensive, regular cooperation; commitment and time for change
- Amount of monthly and additional costs
- In the long term: lose money (pay too much tax, plus costs for tax advisor, lack of reinvestment) due to lack of quality/quantity advice
Remember for the future, tax planning is often in your hands!
Find a tax accountant: The 3 best tips
After the dangers of choosing a tax advisor, now straight to the tips on how to find a good tax advisor.
Advertisements in search results on Google & Co.
First of all, the most important tip: Do not click on the advertisement! You are on the Internet looking for a tax consultant in Berlin-Mitte, Cologne or Hamburg and do it like 92% of the people, you type in your request in one of the popular search engines.
The first places in search engines are always paid ads, disguised as search results. The only indication of this is the small word “Ad”, sometimes “Sponsored”. These ad spots are extremely popular! Why? Almost every click here. From my experience, go directly to page two of the search results, here you will find fewer ads for one thing and also not the companies or tax offices that spend a lot of money on marketing.
Because, who pays the money for the marketing budgets? You, the client of the tax advisor.
Ratings on online portals
Besides search engines, comparison portals, online magazines and other online sources for recommendations are also popular. Pay attention to qualitatively and quantitatively meaningful opinions. So compare the number of reviews, because only one rating is not meaningful, sometimes even bought.
- More than 5-10 reviews
- Ratings with meaningful content
Recommendations from experienced self-employed people
Should you know other entrepreneurs, trust their experience and opinions.
Importantly, these people should be entrepreneurs, not private individuals. After all, the matter, tax advisor for companies, is different than for private individuals and their wages or salaries. But also remember that the contact has been working with the tax advisor for some time, ideally the experience should be longer than three, four years. If you ask entrepreneur friends who have just started their own business and have only been with a tax firm for a few months, the experience may be too short term.
So tax advisor tips are best from contacts who have been running a successful business themselves for more than five or ten years.
These 3 little tips sound simple, but are very effective in finding a good tax accountant near you. Law firms that are reputable, don’t incur unnecessary costs (marketing) and do solid work. Let’s recap these 3 simple tips.
Checklist: Tax consultant in the vicinity, 3 tips
3 Tips from the field, find a tax advisor:
- Do not click on the advertisement in the search results (go directly to page 2)
- Rating on online portals (more than 5 opinions)
- Experiences and recommendations from successful entrepreneurs
Now that you’ve learned a lot, about the risks and dangers of being tied to an accountant, as well as tips on how to find a good accountant, including online, let’s get back to the more specific tasks your accountant performs for your business.
Tasks: Tax structuring, tax returns, wages, balance sheet & co.
If you have found a good tax advisor, then from now on it is mainly about these issues:
- Advice on tax preparation and structuring
- Tax returns (monthly filings and annual evaluations)
- Wages and salaries for employees
- Annual accounts
Advice on tax preparation and structuring
If you want to run a restaurant in the future, a small business with two, three employees, then monthly financial statements, annual financial statements are the A&O for you. But if you want to grow as a company, then the tax structure, or tax avoidance is one of the most important factors in choosing the right tax advisor for your company.
Tax advisors need to know the basics, as well as new tax legislation and, above all, ways to avoid taxes.
We do not want to delve too deeply into the subject of tax avoidance at this point. After all, there are experts for that! But it is important to emphasize, as mentioned before, taxes are, for the majority of businesses, the biggest cost, every month, every year. It gets even better:
Every euro that is not spent on taxes can be reinvested by you and thus generates a further return for you.
However, in the process of growth there are also changes in the legal form of enterprises. Considering a possible sequence, this development of the company could include the following stages:
- Sole proprietorship
- Limited liability company
- Stock corporation (AG)
- Holding (with subsidiaries)
Thus, tax consultants also help with the change of the individual legal forms of companies. Tax structuring has so many facets, each of which takes effect individually, depending on the company and its activities. With the three practical tips (above) to find a tax consultant, you can find such tax firms in any city, even in your district.
In everyday life, however, the tasks of a tax advisor for companies do not lie in the provision of advice, but in the processing of tax matters.
Processing of tax matters
Now we come to the central core of the work of a tax advisor, simply put: accounting. The processing of tax matters is pretty much the regular standard task of any tax office. In doing so, law firms evaluate the current previous month. If all queries are clarified, the preliminary returns, the evaluations, wages and other information, following the preparation, are transmitted directly to the tax office.
So every month the tax returns come in. Depending on the company’s structure, these include the wage tax return, the capital gains tax return and, for the majority of companies, the standard advance return for turnover tax.
Then every year comes the preparation of the various tax returns, depending on the business model and construct. The typical standards of the annual financial statements include, for example, the income tax return, the corporate income tax return, as well as the business tax returns, which in turn bring you to the realization: Taxes are the biggest cost in business!
After that, the tax firm prepares the balance sheets. Balance sheets are the annual evaluations, they are not only transmitted to the tax office, but also to the Federal Gazette. Here the balance sheet of your company, insofar as you are not a sole proprietorship, GbR, or similar, is available for everyone to see.
Checklist: 6 Tasks Areas
Let’s summarize the processing of tax matters once again:
- Payroll accounting
- Tax returns / this includes wage tax return, capital gains tax return and advance return for turnover tax
- Preparation of tax returns / this includes income tax returns, corporate tax returns, trade tax returns, annual VAT returns as well as inheritance tax returns and also gift tax returns for wealthy persons
- Bookkeeping / this includes setting up the bookkeeping, creating a chart of accounts, bookkeeping itself, but also the account assignment of the documents
- Preparation of financial statements / this includes the simple income statement, opening balance sheet, annual financial statements, interim financial statements, liquidation balance sheet and the corresponding explanatory reports
For the sake of completeness, tax advisors Hessen, of course, not only in the establishment of the company, but also in the liquidation, should something go wrong.
Assistance in insolvency matters
For the sake of completeness, here is a reference to the assistance in insolvency, which is also given by tax advisors. Companies fail, accordingly, it also needs people who take over the liquidation. Accordingly, the tasks of a tax advisor also include assistance in insolvency.
Read more on the topic here:
Do I need to hire a tax advisor?
No, hiring a tax advisor is not mandatory, no matter what form of business you have chosen.
Cooperation with the tax consultant: Your tasks
You have now learned a lot about the tasks of a tax advisor, the various financial statements, monthly filing and annual balance sheets. But what does the cooperation with a tax advisor look like in practice?
Practical experience: For whom useful?
First of all, for whom are the following experiences useful? The following areas of collaboration apply more to sole traders, UGs (limited liability), GmbHs, under 10 employees. All businesses under 10 employees are considered small businesses. Then it starts with the SMEs (small and medium-sized enterprises), they have 10 to 250 employees. Here, of course, you are set up quite differently from a tax point of view than when you set up your business.
This area is explicitly not about tax structuring, but about daily cooperation with the law firm. From wages, their billing and calculation for health insurance, the monthly VAT advance return, business tax, as well as the annual financial statements, which will always come back to you. By the way, the annual accounts are not included in the additional costs, but are charged extra by the tax consultant, as described briefly above. But more about that in a moment.
If you own or are building a business that stays under 10, maybe 20 employees, these are the standard processes you will face when working with your tax professional. The following section should give you an overview!
Wages, registration, health insurance, etc.: Levy and appointment
The most important thing in any company is:
Only through good, i.e. motivated and trained employees, good results are guaranteed, this is true for 99% of companies. Even if the owners are “strange characters”, employees come first! Accordingly, wages, the registrations of the times with the tax advisor, as well as the calculation of the health insurance are a task, is always an interaction, from the information you give the tax advisor and what she or he makes of it.
What is your job?
You must ensure that wage data is available on time by the 15th of each month.
Not all employees in the company have a fixed number of hours. So now some may ask, how am I supposed to know exactly how many hours employee XY will work? If the hours are flexible, you will need to estimate the number of hours. In the following month, any absences will be compensated again.
Cost factor health insurance – A short excursus
But health insurance is also a big cost factor that is often overlooked by founders. Calculate with costs of 800 to 1500 euros per month per employee alone. Calculated over the year, this is a factor that is easily overlooked when extrapolating and calculating, because health insurance is not part of the salary paid, it is collected separately. 800 Euro in the month alone are a cost factor of 9,600 Euro calculated over the year. Anyone who founds a GmbH with 25,000 in start-up capital will quickly reach a critical point.
Here’s a little example:
- Salary (transfer): 1.500 €
- Health insurance: 700 €
- Settlement tax consultant: 15 €
- Total costs: 2.225 €
- Unconscious costs: + 32,6 %.
The gap between the €1,500 in thought and the €2,225 actually paid is a whopping €725, or +32.6%. So always remember that the cost of wages and salaries ultimately includes not only the actual payment to the employee, but also the health insurance and wage costs that have to be paid additionally for each individual employee.
This calculation error is multiplied with each individual employee. If, for example, you hire 5 employees through an investment or a loan, right at the start of the company, and do not take into account the costs for health insurance and payroll, you will have a monthly deficit of 3,575 euros in the calculation example. With a loan or investment of 50,000 euros, 5 employees are a huge cost. After a period of 6 months, the sudden, supposed loss (which you did not have in mind), amounts to 21,450 euros.
Finance is the number one reason businesses fail.
Therefore, it is important: you must take an interest in taxes and duties yourself.
Do not leave the work (only) to your tax advisor!
However, there are also potential savings for employees that should be communicated by the tax advisor. For example, if special services are provided for employees, such as the assumption of costs for train tickets that would otherwise be purchased by the employee himself for the way to work. Many aspects that need to be considered by a good tax office.
Important for you, is the submission of the wage data, punctually to the 15th of the current month. For employees who do not have fixed times, the expected working time must be estimated.
- Submission of wage data by the 15th of the month
- Submission of actual and estimated working times (depending on employee type)
Monthly taxes: sales tax, trade tax, etc.
Besides employee wages, however, there is a lot more for you and the tax preparer to take care of.
If there is one continuous factor that plays a role in your business life almost every day, it is accounting. Whether receipts from purchases, incoming invoices from suppliers, outgoing invoices for customers, all account activity is meticulously recorded, documented and archived in accounting.
Golden rule in accounting
For those who have not had any contact with the subject themselves, in quite simply explained:
Each posting a document
This is the classic golden rule in accounting. Means, every single transaction, whether with physical cash or digital transactions, must be justified by a receipt. Depending on whether it is an incoming payment, an outgoing payment, or even just a movement from account to account.
- Incoming invoices
- Outgoing invoices
- Other such as interest
Today, much of the accounting is done through digital systems, accounting software. In the past, there were still classic folders, simply put, each month has a folder. Here the account statements are filed and behind each individual account sheet, the receipts are filed collectively. In this way, all transactions are transparently traceable, for example for one of the most important actors, the tax office. But also for yourself, a neat, orderly bookkeeping is very important, after all, you get only so key figures about your company.
Accounting in the past: folders, bank statements and invoices in chronological order.
In simply explained, that was already a lot of the bookkeeping that goes on in regular businesses.
The monthly accounts must be submitted to the tax office by the 10th of the following month at the latest.
Accordingly, you should plan your financial accounting so that they are ready directly at the turn of the month (1st, 2nd, 3rd). This way, your tax office has enough time to process them and you also have time to answer queries without time pressure.
Tip! If you are late with the accounting, communicate with the tax advisor or the tax office – communication is a very, very effective means in all tax matters.
As soon as there is sufficient turnover, trade tax also becomes an issue for you and your tax advisor. The trade tax is automatically calculated by the tax office. Small companies pay it at the end of the year, companies with the appropriate turnover and history pay monthly, so to speak in advance, so that at the end of the year there is no large tax bill for the company.
Once again summarized the most important tasks:
- Each posting a document
- Accounting almost 1 calendar month economically together
- Submission no later than the 10th of the following month (tax office)
Sales tax regulations: Domestic and foreign
Calculations at home are still easy to organize, as soon as it goes abroad, many have big question marks themselves. Honestly, from my experience, when I first faced the issue, my head exploded. All that came from the accountant was a 15 minute explanation. My simple question: when do I charge sales tax, when not?
Tip. From this question you can quickly see whether a tax advisor can explain facts easily or not. If someone starts to give you long monologues about the “EU joint business…” – do not hire him or her.
Here is the simple answer to the sales tax regulations for domestic and foreign invoices.
For transactions between companies (in Germany):
- Invoicing and invoice recipient in Germany: VAT
- If the invoice recipient is located abroad (EU Schengen area): no sales tax
- If the invoice recipient is located in a third country (outside the EU): no sales tax
There are a few special rules:
- Private customers (B2C) always pay sales tax ( value added tax for private individuals)
- Companies under the small business regulation are exempt from turnover tax
For the sake of completeness, here is a list of the European countries that currently (as of 2021/06) belong to the European Union, or more precisely the Schengen area.
- Schengen States: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Iceland, Italy, Latvia, Liechtenstein, Lithuania, Luxembourg, Malta, Netherlands, Norway, Poland, Portugal, Slovakia, Slovenia, Spain, Sweden and Switzerland.
Source: Federal Foreign Office, Article Schengen States
Annual taxes: annual accounts and example of VAT declaration
At the end of the year, depending on the legal form and company structure, financial statements are sent to the tax office. For almost all companies, this includes, for example, the sales tax return (except for small businesses that are exempt from sales tax [Ust.]). The sales tax return almost once again summarizes all tax transactions that are related to sales tax.
Tip for the monthly sales tax! Especially the sales tax is an important item that must be paid monthly, safely. With many bills there are margins, not with the tax office. Do not pay bills with it.
If the sales tax is not paid, the business account is seized. If you only have one business account at the beginning, you will quickly get into payment difficulties. Because, until the amount has not been cleared, you no longer have access to the account. Therefore, very important: the monthly accounting and the annual closing of the sales tax.
The VAT return is prepared by the tax office. In addition, the annual financial statement is obligatory for all companies.
The annual financial statement is also important. It summarizes everything once again, clearly. While you and your employees still have many tasks of your own in accounting, the annual financial statement is almost completely prepared by the tax advisor. You may only have to answer a few questions about individual transactions in advance. When the annual financial statement has been prepared by the tax consultant, you receive an evaluation and still have to sign it. The submission usually does not happen at the turn of the year, but is tax-efficient, on time, at the latest before the submission deadline.
For completeness: Small businesses and freelancers usually prepare a short EÜR (income surplus account).
Annual accounts: Content
You will then find the following information in the annual financial statements:
- Profit and loss account
- Management Report
- Statement of changes in equity; segment reporting (only in connection with consolidated financial statements)
Deadline: Own production / tax consultant
When must the annual financial statements be submitted? The deadline for submitting the annual financial statements to the tax office is currently 31 July. If you are assisted by a tax advisor, the deadline is significantly longer, extended to 28 or 29 February of the following year.
- Own production: 31.07.
- Preparation by tax consultant: 28. or 29.02. (following year)
Costs: How much does a tax consultant cost?
How much does a tax consultant cost? This question can only be answered in part. Tax consultants charge according to the fee table, but they also have room for manoeuvre here. The fee table only covers standard services, i.e. monthly bookkeeping. Even the annual accounts cost extra. Every minute of consultation costs extra. Every time you get documents, records or figures, it costs extra.
For a first, rough overview, this simplified fee table will help you. It should make clear to you that tax advisors charge according to the turnover of the company. Of course, you also have a certain margin on this fee regulation, but the fee table is good for orientation.
This is how much a tax consultant costs, with a turnover of 100,000 euros, for balance sheets, EÜR, income tax returns & Co.
Source: fivmagazine.de, tax consultant costs
|Subject||Minimum fee||Medium fee||Maximum fee|
|Income tax return||1/10
|Corporate income tax return||1/10
|Trade tax return||1/10
|Income from renting||1/20
|Income from capital assets||1/20
|Payroll accounting (per employee)||15/MA
|Time fee (by the hour)||-300||-500||-700|
Last but not least, we have a few typical questions and answers founders have if you haven’t had any experience with tax advisors.
Questions and answers: Tax consultant
Every year tens of thousands of businesses start. Restaurant, fashion boutique, media agency to app or online platform. They all have questions, even founders in real estate. Starting from: “Where do I find a good tax advisor?” to.
Where can I find a good tax advisor? Lists
As described above, there are mainly 3 tips that help to find a good and reputable tax advisor. You will usually get the very best recommendations from well-known business owners who have been in business for years themselves and have a good, commercial understanding. If they are happy with a tax accountant over a long period of time, then they are likely to be a recommendation for your business.
If you don’t have any direct contacts with contractors then you should start your search on the internet, again there are two good tips. One, don’t click on ads in the search results and two, read through reviews and make sure the company has not just 1, 2 or 3 reviews but ideally 10, 20 or even 30 depending on the size of the city.
Find a tax advisor! 3 tips summarized:
- Do not click on the advertisement in the search results (go directly to page 2)
- Rating on online portals (more than 5 opinions)
- Experiences and recommendations from successful entrepreneurs
Should you want direct recommendations now, read more here! Good tax advisor recommendations from Bavaria, over North Rhine-Westphalia to Berlin and Hamburg. With over 30 cities and all free of charge:
- Tax consultants in the vic inity (fivmagazine.de)
How much should a tax consultant cost? Comparison offers
We have already explained the most important aspects of tax advisor costs above.
If you do not yet have a tax advisor and are currently searching, you should proceed as with other service providers, get comparison quotes. This way you can estimate the costs and compare them with other tax consultants. For example, if you have found a few good addresses in their city through the 3 tips to find a tax advisor, get a quote from each of them. This will help you find the best consultant.
What does tax consultant mean in English?
In English, a tax consultant is referred to as a “tax consultant”.
What does it cost to file an income tax return with a tax advisor?
If you earn money, you have to pay income tax (minus the exemption amount). One of the first questions asked by founders: What does an income tax return cost with a tax advisor? As seen above in the table of fees, the tax return costs between 142 and 853 euros.
|Subject||Minimum fee||Medium fee||Maximum fee|
|Income tax return||1/10
When is a tax consultant worthwhile?
This in turn leads us to the question: can I do my tax return myself? As learned above, hiring a tax advisor is not mandatory. Therefore, the question of when it is worth hiring a tax advisor cannot be answered in a general way. Simply put, if you have commercial knowledge and interest, you can do your tax return yourself. However, you run the risk of not taking advantage of tax benefits, for example in the case of tax allowances. It is therefore recommended at most for small businesses and sole proprietorships. For any business forms apart, whether GbR, UG, GmbH, you should work with a tax advisor. Finally, it also goes well verification of the data to the tax office.
Setting up a company, legal forms and taxes
Learn even more about taxes, legal forms and the first years of setting up a company here.
Form a company
Founding a company – You want to found your first company? Requirements for you as a founder, share capital, shareholder agreements, costs for the foundation, legal forms and checklists. This sounds complicated for beginners, but it is actually quite simple. The process of founding a company is usually relatively the same. I have summarized the foundation here once in simple steps, for you. Learn how to start your own business. After the great guide to all legal forms or types of companies, today a detailed look at the establishment of a (real estate) company for beginners.
Legal forms in Germany
Legal forms in Germany – What types of company are there? If you want to start your first company, then choosing the legal form is one of the first steps in the process of setting up a company. Whether it is a special real estate company or founding a startup, here I have summarized all types of companies in Germany for you. In this list of companies you will find explanations, advantages, disadvantages, costs, the process with checklists and requirements, for each type of company. In addition, especially for real estate owners, as an extra: real estate GmbH (asset managing GmbH) and family foundation with tax advantages. All legal forms in one list!
Taxes in Germany
Taxes in Germany – Corporation Tax (KSt), Income Tax (ESt),
USA – What taxes do you have to pay when you buy a house in USA? Below you will find a list of all the types of taxes you have to pay, how much they are, where you can read more about them and what they are used for. Everything you need to know about taxes related to buying a property, be it your home or a vacation home. We answer the questions, what are “transfer taxes”? How much is property tax when you buy a property? Here are the answers.