At some point you’ve likely heard the phrase “tax planning” mentioned. And you’ve probably seen many accountants that espouse tax planning as part of their firm’s services. But do you really know the what’s and why’s of tax planning?
Tax planning is a proactive way to reduce and save on taxes. When most people file their tax return, they do so without having thought much about it before they file – they wait to see if they will owe or receive a refund in the moment. But by doing some strategic planning you can be aware of your tax liability ahead of time and take action steps to minimize it, resulting in either a reduction in the amount you owe or an increase in the refund you receive.
When starting a tax plan, it’s important to look at your entire financial situation, both business and personal, in order to make a proper analysis:
It seems like a simple enough concept to plan for taxes, but a surprising number of individuals fail to do just that. As a result, almost all business owners are overpaying in taxes in one way or another. This means less money in your pocket and more in the Government’s. Tax planning can result in considerable yearly savings that helps your business when it comes to cash flow, ability to hire or purchase assets, investing in your future, etc. For these reasons and more, taking proactive steps and planning for your taxes is highly beneficial.