Credits and exemptions are the most valuable products because they reduce taxes dollar for dollar. Deductions are useful and give a Federal tax benefit of 21 cents on the dollar. Similarly, exemptions from sales/use taxes or property taxes can be very useful in managing the tax expense. It’s important to realize that income taxes at the Federal level may not be much of an issue, especially if an entity is a pass through. However sales/use, property and license taxes are required to be paid whether or not the company makes money.
Additionally, many states do not recognize “flow through” status so that while no Federal income tax is due, some state and local taxes must be paid. This requirement can be quite onerous in times of economic distress, so getting exemptions in place before trouble starts is critical. Talk to any purchasing professional and ask them if 6% to 10% is important to them. That alone will give business owners a good idea of the value of either exemptions and/or deductions. Keeping in compliance is very critical. Credit grantors are very concerned about these items.
I have had to deal with several issues that were worth $137 for companies with $2 to $5 billion in US receipts. It held up funding of between $600,000,000 and $2,500,000,000 for up to two weeks. States have spent billions of dollars in getting up to date software used to discover taxpayers who are non compliant (their term is much stronger). Failure to maintain an up to date tax calendars are failure to respond promptly to demands can poison the atmosphere.
It is well to remember that you have to deal with these people for as long as you stay in business in their jurisdiction. Hostile audits can severely stress a smaller organization. I’ll be happy to estimate the savings beforehand and compare them after the returns are filed.