Preparing your own taxes can be intimidating. Knowing how to set up your business, which deductions to take, or how to pattern your spending are not always easy decisions. On the other hand, having your business tax planning conducted by a professional tax expert often can pay for itself- here’s how. Tax planning is a process of looking at various tax options in order to determine when, whether, and how to conduct business and personal transactions so that taxes are eliminated or considerably reduced.
Many small business owners ignore tax planning, and don’t even think about their taxes until they’re scheduled to meet with their accountant; but tax planning is an ongoing process, and good tax advice is a very valuable commodity.
There are countless tax planning strategies available to a small business owner. Some are aimed at the owner’s individual tax situation, and some at the business itself. But regardless of how simple or how complex a tax strategy is, it will be based on structuring the strategy to accomplish one or more of these often overlapping goals:
- Reducing the amount of taxable income
- Lowering your tax rate
- Controlling the time when the tax must be paid
- Claiming available tax credits
- Controlling the effects of the Alternative Minimum Tax
- Deferring income to the next tax year.
- Accelerating expenses in the current year.