What is Tax Planning and How Can It Help You Pay Less Taxes?

Raise your hand if you love paying taxes… (crickets chirping) … Of course you don’t!

Everybody would prefer to keep as much money as possible in our pockets and hand over less in taxes. But how? For business owners, the answer lies in tax planning.

What is Tax Planning?

Tax planning involves forecasting the amount of taxes you will owe (tax liability) and finding ways to reduce it. You can work with your accountant to determine how to conduct business transactions in order to reduce your tax liability.

One of the most important things to consider for effective tax planning is not to leave things till the last minute when it’s time to file your taxes. Good tax planning is an ongoing process. It involves making wise choices about how to spend and save money, along with how to make investments at the right time.

How can I get started?

It’s highly beneficial to have regular meetings with your accountant to gain knowledge and get advice about how to manage your taxes. The first thing to do is get organized. Keep track of your monthly income and expenses, and meet with your accountant or tax advisor quarterly. They can help you to find out what tax credits, deductions and exemptions are legally available to you.

How Will Tax Planning Benefit My Business?

The less taxes you have to pay, the more money you will have to spend, or invest in your business. Tax planning can help you to achieve various goals such as reducing your amount of taxable income; lowering your tax rate; controlling the time when taxes must be paid, and claiming any available tax credits.

Tax planning can be a complex process, and very overwhelming for many entrepreneurs. This is why working with a professional will reduce your risk of misinterpreting tax laws or making inaccurate calculations. For more insight into tax planning for your business, contact Pam Little, CPA at pam@pamlittlecpa.com or call 416-268-1605.

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