You have a lot on your plate if you run a business (or businesses!). You're responsible for ensuring your organization is running smoothly, which often includes wearing many hats. One task that is easy to let slip when you’re in the middle of it all is planning, especially tax planning. Since it is not a fire that needs to be put out, it usually gets put on the back burner. However, skipping tax planning is an invisible hurt for a business. It’s money you don’t know you're leaving on the table.
In this article, we’ll explain what tax planning is, why it is so important for business, and some tips to get started.
What is Tax Planning?
Tax planning at the highest level is understanding what your tax liability could be and how to optimize your liability through the development of a tax plan. This could mean minimizing your tax liability by organizing your finances, or it may involve making changes to your business to take advantage of deductions and credits you could be entitled to.
Why It's Important for Businesses
You may think, "I'm already busy enough—why do I need to worry about tax planning?" But the truth is that tax planning saves time and money in the long run.
It Saves Time
If you plan (and keep good records), you'll be able to spend more time building your business. Instead of scrambling to gather all the necessary information, you'll have everything you need at your fingertips. This will help you file your taxes quickly, efficiently, and on time, avoiding any unnecessary fees.
It Optimizes Your Tax Liability
Tax planning can also help you optimize your tax liability. Taxes are taxes, but by planning, you can understand what changes can be made and their ROI to take advantage of deductions and credits. This can free up money that you can reinvest back into your business.
It Optimizes Your Business Plan
Tax planning can also help you optimize your financial and business plan. Understanding your tax liability allows you to make better decisions about how to allocate your resources. This can help you grow your business and achieve your long-term goals.
Getting Started with Tax Planning
Tax planning is an important task that too often gets overlooked. But by planning and keeping good records, you can save yourself a lot of time and money in the long run.
There are a few key things to keep in mind when it comes to tax planning, including:
Structuring your business in a way that minimizes taxes
Keep good records
Understand what expenses are tax-deductible
Make sure to file your taxes on time
Take advantage of all credits and deductions
Be proactive about changes in tax laws
Questions?
Have questions about how tax planning can be beneficial for your business? Contact us to speak with one of our tax planning experts.
