Tax Planning Takes a Village

A successful business requires planning, so when it comes to determining your business’s income taxes, tax planning can help make the most of deductions and potentially lower your tax bill. By assembling a team of tax, legal and financial professionals, you may be able to create tax strategies that can reduce what you owe.

Tax Planning Goals

The goal of tax planning is to find effective strategies that minimize risk and save your business money. It is important to the process to know how much you earn, the amount you typically owe in taxes and which of your business’s expenses are deductible. From there, you can define specific goals, such as preserving working capital, expanding your business’s capacity, etc.

Meet with Your Accountant

Meeting with the accountant who prepares and files tax paperwork for your business is a good place to begin developing a plan. Discuss whether your CPA has the resources and expertise to create a plan that can position your business to take advantage of all tax code benefits available to you. If your CPA is unable to do this, he or she may be able to recommend other professionals who can help you design a plan. An accountant who specializes in tax planning can work with you to protect assets and build wealth outside of your company.

Where Does Your Business Stand?

Organizing your records and ensuring they are up to date is an essential precursor to tax planning. Be certain you know your business’s current net profit and confirm that your administrative staff can provide your tax accountant with financial information, such as cash flow and reserves.

Include Your Financial Professional

Integrating your personal financial goals with your goals for your business can ensure that your tax planning strategy does double duty. Your financial professional will add another layer of knowledge to the process, since your financial plan already may include tax strategies that will complement your business tax planning.

Worth the Cost

The money you spend on tax planning should deliver savings that far outweigh the expense and offer a good return on your investment. A bonus: the cost is deductible as a business expense.