Why Tax Planning Is Important For Businesses
Tax planning is crucial for the small or medium-sized business looking to mitigate the liabilities and risks that accompany their business transactions. This is especially true when considering that almost all transactions are taxed. It is important to understand and keep up with any tax law changes that have taken or may take effect on an annual basis. Tax planning itself involves the arranging of your business affairs so that you are able to reap the benefits from those tax laws.
The risks that come from not planning far outweigh any supposed benefits and could lead to tax evasion charges. This can happen with missed tax payments, withheld tax monies or mistakes in filing returns. By not planning, you miss out on the following benefits that come with business tax preparation:
• Maximization of tax relief or available tax credits
• Reduction of payable tax by deduction of expenses from earned income
• Loss of greater control over when taxes are paid
Now that you know you want to initiate the tax planning process, we understand how overwhelming taking on the legalities of this can be. We recommend taking a look at some key tax strategies in your planning and enlisting the help of an educated tax planner to ensure that your business is properly handled.
One popular topic in the world of business planning is capital gains tax. With the help of our tax planning service, you can calculate total business sales and to whom those were made. This guarantees that you will have a full grasp of what in your financials will qualify you for tax exemption.
Another hot topic is stock-taking. Stock-taking means that your business conducts a stock count at the end of a fiscal year. This allows you to determine what can be written off or written down to specific values while also doing away with any old or superseded stock. The end goal of stock-taking is to reduce taxable income.
One overlooked benefit to planning ahead is the availability of green tax credit programs funded by our federal government. These programs benefit businesses relying on alternative forms of energy for their heating or cooling systems.
Also worth noting here is the importance of investments. If your business invests in any funds, it is crucial that you enlist the expertise of a business tax preparation service to oversee these operations. If any investments you have made resulted in a loss, a tax preparation specialist will find a way to offset that loss with the gains accrued from other investments during a given reporting period. If any of the investments you have date back in age to more than one year, your business will need to look at the possibility of implementing capital gain taxes.
These are only some of the many vital tax strategies that will be looked at in planning ahead for your business, and as you can see, the importance of getting your tax planning right the first time around simply cannot be overstated.
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