Tax Planning for Your Small Business – Professional Tax Services

There is a difference between tax preparation and tax planning. Your goal for tax preparation is to ensure you are in compliance with federal and state tax laws. The purpose of tax planning, however, is to minimize your tax liability.
Planning is a proactive approach to taxes, while tax preparation without planning is reactive. Unfortunately, many small businesses overlook planning and end up paying more tax than they need to every year. Often, businesses avoid tax planning because they don’t understand the value of it.
The time to start planning is the beginning of the year (your fiscal year) and to continue planning after your filing. By initiating planning at the onset of your year, you can better leverage tax advantages and align your financial strategy with your business objectives.
Because tax planning involves reducing your tax liability, it may require reorganizing your finances and modifying some aspects of your business so you can take full advantage of deductions and credits. Through tax planning, you can expect to grow the amount of money available for reinvestment in your business.

Effective tax planning requires the following:
• Keeping well organized records
• Filing your taxes on time to avoid penalties
• Comprehending what expenses are tax-deductible
• Reformulating your business to minimize your tax liability
• Taking advantage of every allowable tax credit and deduction
• Keeping up with changes in tax laws so you can be proactive

Should you hire a tax planner?
Probably yes. Tax planners are an invaluable asset to most small businesses. They conduct the long-term work that business owners don’t have the time or expertise to carry out. An expert planner will keep up with changes to the tax code and comprehend how it affects your tax and investment strategies, thus enhancing your decision-making.

Whom to hire?
Ideally, hire a tax planner who is also a professional tax preparer. Your planner should have an excellent tax education and tax planning background, and the reputation of knowing what questions to ask to gain a complete understanding of your financial situation and goals. Your planner should be available year round to provide advice whenever needed without having you worrying about the cost of the services. We actually offer personalized complementary tax planning advice to our clients throughout the year.
Professional Tax Services is a locally owned provider serving over 3,500 local residents and businesses. For more information, call 661-259-1967 or visit www.scvprotaxservices.com.