Running a business requires more than just passion and dedication. Yes, these two things are crucial, but without a plan, you may find it hard to grow your business – or even keep the doors open.
As a business owner, you have a plan for everything – your marketing, your sales, your growth. But do you have a plan for your taxes?
Tax planning services – not to be confused with tax preparation services – will help optimize your company’s tax situation before filing. The goal is to find ways to legally reduce your tax liability based on your current goals and future plans.
Tax planning services offers many benefits, but do you really need it? Yes! Here’s why:
1. Tax Planning Services Save You Time
Time is your most valuable resource – you can’t get it back. Why waste it on tax planning? You already wear so many hats. There’s no need to wear one more, especially with something as complex and important as tax planning.
Ask yourself the following questions:
- Do you know all of the possible deductions your business is entitled to?
- How much do you really know about tax law?
- Do you have the time for tax planning?
Chances are, you answered “no” to most or all of these questions. And that’s okay. It’s your job to run your business, not worry about tax planning.
A professional tax planner will free up your time so that you can focus on managing and growing your business. That extra time can mean the difference between launching a new product line this year or having to wait a year or two because you didn’t have the time to invest in growth.
2. Business Tax Reduction Strategies Save You Money
Are you spending more than you need to on taxes? If you have been doing your own tax planning and preparation, there’s a good chance that you are overspending.
There are many deductions, credits, and other provisions available to businesses, but many business owners are unaware of these opportunities. Tax laws are constantly changing, which can make it difficult to find new tax-saving strategies.
A tax planner will use tax reduction strategies to legally reduce your tax liability. The right tax-saving strategies will help you keep more of your hard-earned income while ensuring that you’re complying with tax laws.
In addition to maximizing deductions, a tax planner may also be able to help you:
- Defer taxable income
- Take advantage of the R&D credit for qualified expenses
- Utilize tax credits that are expiring
These are just a few of the many ways a tax planner can help you reduce your tax burden and save you money. Every business is unique, so there may be other strategies that can be employed to further reduce your tax liability.
3. Tax Planners Ensure You’re Compliant with Tax Laws
A tax planner can help you find ways to legitimately reduce your tax burden, but they also work to ensure that you’re compliant with tax laws.
The purpose of tax planning is merely to plan for the future and take advantage of strategies that can reduce your tax burden.
4. Tax Planners Understand Changing Tax Laws
Tax laws frequently change. A strategy that’s available this year may not be available next year. Credits and deductions along with their rules and qualifications can change at any time.
It’s a tax planner’s job to know and understand tax law changes. Their knowledge and expertise can help you avoid costly errors or ensure that you don’t miss out on new credits or deductions that may save you money.
Tax planning is an ongoing process. Your planner will meet with you on a regular basis to analyze your financial situation and help you take advantage of any new credits or deductions that are legally available to your business.
5. Tax Planning Can Help You Avoid Costly Errors
Your business, like any other business, has a budget. To save money, you may decide to do your own tax planning and preparation. But you’re not a tax professional, so you make the mistake of taking a deduction you’re not legally entitled to.
Errors like this can be very costly for businesses. In the case of this example, the repercussions for false deductions can be very serious. But even minor errors can wind up costing your business. You may be audited, or you may just wind up paying more than you have to in taxes.
Tax planning can help you avoid these errors. Tax planners have intimate knowledge of tax law, which can help ensure that you only take deductions and credits that you’re entitled to. They can help you avoid other common errors that business owners make when doing their own tax planning.
6. A Tax Planner Can Help You Prepare for the Future
Businesses are constantly evolving and changing. Changes, even minor ones, can affect your tax situation.
When you work with a tax planner, you can prepare for these situations ahead of time. Tax planning can be especially useful if you’re:
- Moving your business
- Just launching and need to choose an entity type
- Expanding to a new location
- Launching a new product
- Planning to invest more in research and development (R&D)
- Interested in deferring some of your business income
A tax planner can help you understand how changes within your business strategy or operation will impact your taxes and whether there are legitimate strategies you can use to keep tax increases to a minimum.
Tax planning is complex and requires special expertise. A professional tax planner will get to know your business, understand its needs and help find the best strategies to help you legally save on your taxes. While you can do your own tax planning, it’s worth the investment to hire an experienced professional.