You don’t know what you don’t know.

February 23, 2018 - Posted by: admin - In category:

taxes - No Responses

This is true for all of us in many areas of our life and concerning a good many subjects.

Consider a hypothetical situation where a man walks into his accountant’s office to ask a few questions.  (Hopefully, that man was courteous enough to make an appointment, rather than just dropping in.)  This gentleman owns a small business that manufactures and markets widgets (whatever those are–they are almost always the specified “product” used in law school and business school hypotheticals).    The business owner has done his research via Google, and various “reliable” websites and his purpose in visiting with the accountant is simply to get affirmation for what he knows to be true.  Or, at least that which he THINKS he knows to be true.

Question #1“I should be able to deduct this and that on my taxes this year because they are legitimate business expenses, right?”  The accountant answers in the affirmative.

Question #2: “This year I will receive the new tax credit ‘_____’ because of the new legislation coming from Washington, right?”  The accountant again answers in the affirmative.

The man then pats himself on the back (at least mentally), thanks the accountant for his time, rises and prepares to leave.   Since he did all the “work” himself and was just “double checking” those things with the accountant, he is not expecting that he will owe any fee for this visit.  Afterall, the accountant didn’t “do” anything, right?  But as he walks toward the door to exit the office, the accountant stops him and asks whether he is aware of X, if he has done Y and if he plans to utilize election Z in the coming tax year.  The business owner is speechless.  He has no idea about X, Y or Z.  In fact, he is so clueless about those items; he is not even sure what questions to ask to gain a greater understanding so that he can respond to the inquiries from his wise, kind, proactive and excellent accountant.  The man sits back down in the chair in front of the accountant, and they spend the next 45 minutes discussing items X, Y and Z about which the business owner had no idea before walking into the accountant’s office.  At the end of the visit, as a result of the sage counsel of the accountant, the gentleman walks out of the office with an understanding of how both he and his company will save thousands of dollars in taxes in the coming year (legitimately and lawfully).

Even though that is an imaginary situation, it is very much true to life.  I am not an accountant, but I know many and work with several, and I am confident that the scenario described above, or at least the themes and lessons in that hypothetical, are repeated almost daily with accountants.  As an attorney, I run into this type of situation on a regular basis.  While the facts and circumstances greatly vary, what is constant is the recurring reality that people just don’t know what they don’t know.  Very often, you and I do not have enough experience, expertise or specialized knowledge to know what questions to ask.  And while it is true that by educating ourselves, we are then in a much better position to know how to ask the right questions, self-help can get us only so far.

Internet resources are awesome in general and pretty good when it comes to answering specific questions.  But Google can’t read my mind (despite what Google may claim). And Google isn’t going to look into the details of my business, my tax profile, my competitive advantages and disadvantages, the personality, strengths and weaknesses of my business partners and/or what the local business climate will do to my business operations over the next 6 or 12 months.

None of this is unique to accounting or legal services.  The same concepts apply to financial planning, investment advisors, doctors, dentists, auto mechanics, etc.  In each situation, what you and I need is to have the relevant professional help us see what we don’t see (can’t see), come to know what questions we should be asking and then work with us to find answers and solutions, as applicable.  In so many areas and instances, we simply don’t know what we don’t know.  We can be blinded by our ignorance and therefore quick to assume that our very incomplete (if not incorrect) understanding and perspective is correct, simply because we have such a limited view of things.

Happily, all around us we have professions who are experts in their fields, who have experience dealing with situations of all shapes, sizes and flavors and who can help us to know what we don’t know, ask the right questions we likely never would have figured out on our own and find solutions to the problems before us.  Though I am undoubtedly biased and very self-interested in this perspective, I continue to believe that with the advances in technology and internet information, these realities will remain over time.  We will continue to need and be grateful for professionals who know what we don’t know and can help us recognize the same.

 

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