What is tax planning and why is it important to your small business?
First, let’s consider the word “plan.” According to Merriam-Webster, a plan is:
Effective planning requires equal measures of forward thinking and the design of methods to meet a goal.
How does this apply to taxes?
Here are some givens:
- We don’t want to pay more taxes than we need to.
- We don’t want to owe more taxes than we expected.
- We don’t want to err in reporting or paying taxes which would result in bigger issues for our small business.
Furthermore, because taxes represent such a large part of the financial picture of a business, financial planning goes hand in hand with tax planning. Knowing where your business is heading financially is a crucial piece of tax planning.
For further information on how financial statements help with financial planning, check out our published blog, Show Your Financial Statements Who’s The Boss.
Good tax planning (and the potential reduction of your tax liability) could include:
- taking advantage of beneficial tax-law provisions
- increasing and accelerating tax deductions and tax credits where possible
- making maximum use of all applicable tax breaks
View this short video featuring small business owners just like you who face challenges with taxes and tax planning:
Even though tax season is upon many of us, it’s never too late to start effective tax planning. Pull in your professional tax advisor today and learn how you and your business can be tax-smart tomorrow.
