Tax Planning: Why it’s Essential for Your Business
As business owners, we all try to do our best to plan ahead and avoid unforeseen challenges that can impede our growth.
What if I told you that preparing for your taxes ahead of time—rather than waiting until the end of the year or the start of tax season—could help you do just that?
Targeted tax planning can allow you to start your new fiscal year feeling in control and empowered. With proper planning, you’ll be in a place to make the right financial decisions to not only reduce taxes owed next year but increase your available income throughout the year.
What is Tax Planning?
Tax planning is exactly what it sounds like: looking ahead and being strategic when it comes to your unique tax situation. While you may be aware of some tax breaks and deductions you can qualify for, if you aren’t strategic in how you leverage these, it can cost you when you’re filing your taxes next year.
Generally, tax planning is done with a trusted CPA. Tax planning considers your individual business and its needs and provides a guide for you to manage major expenses while minimizing your taxes owed.
A tax plan is the difference in not only knowing how much you’ll owe in the end but also, arguably more importantly, how much you’ll save.
Why is Tax Planning Important?
Tax season isn’t the time to uncover potential tax cuts. Taking a proactive approach at the start of the year can help you identify resources and strategies to help you legally reduce taxes based on your year ahead.
With a personalized tax strategy, you’ll remove a lot of the guesswork from your taxes. Your CPA will help you understand exactly what you’ll owe before you prepare to file—not to mention, working with a professional and planning ahead reduces your chances of being audited (and who doesn’t want that?).
3 Major Benefits of Tax Planning
Tax planning reduces stress and boosts your bottom line. Here are a few key benefits to thinking ahead and making tax planning a part of your financial strategy.
Avoid Common Mistakes
Most people are aware that there are many deductions available to them to curb business costs at the end of the year. However, not having a clear plan before the year begins can lead to unnecessary spending in an effort to drive up potential deductions or incorrectly timing large purchases. Proper tax planning helps eliminate these missteps and sets you up for success.
Save Money and Grow Your Business
Having a tax plan built into your business can help you proactively plan out your business while reducing costs. These savings can be reinvested in growing your team, upgrading systems, marketing, and driving your business forward—they’re also all potential deductions for next year’s taxes!
Maximize Your Refund
Knowing what deductions, credits, and provisions are available to you is crucial and a big part of your tax plan. A trusted advisor can make sure you know exactly what you need to move forward. Your advisor should also keep you abreast of any changes to tax laws and codes that may affect your business, preventing any surprises when it’s tax time.
Partner With an Expert to Protect Your Business’s Long-Term Financial Health
When it comes to tax planning, time is of the essence. Some tax planning strategies take more time than others to implement, and there are deadlines to consider. In order to achieve the most desirable outcome, reach out to a CPA now.
Modis Advisors specializes in helping start-ups and small-to-medium businesses grow and exceed their potential. If you’re interested in learning more about how we can help with your tax planning or have other questions, we’d love to connect with you.