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Small business owners have enough to worry about as they face the challenges of meeting their cash flow needs, recruiting and retaining employees, and marketing their brand. Beyond that, they’re trying to make time for all their activities, including administrative work. Business owners also need to follow the federal, state, and local rules and regulations governing their business – including tax compliance.
With everything going on to run a business, it’s understandable why some owners don’t prioritize tax planning. However, tax planning plays a crucial role in achieving financial stability, helping small businesses make smarter decisions. Running a business demands year-round efforts and a long-term vision. Because taxes impact a business’s finances, owners should implement tax strategies that ensure they’re paying the lowest taxes possible.
Tax planners can identify important tax considerations no matter what stage of their business’s life. Through tax planning, your business can utilize all available tax credits and deductions, reduce the amount of your taxable income, and lower your tax rate.
A qualified tax planner will review and analyze your books, designate deductions strategically, and track carryover tax deductions. By carrying over a tax loss to a future year, you can offset a profit and reduce a future tax payment.
Tax planning starts as early as possible, allowing your business to plan the timing of purchases and other expenditures. This is important, particularly because mistakes can happen when you wastefully spend money, thinking it will reduce your tax bills. Some accelerate expenses into the current year without considering that next year may be more profitable.
Therefore, tax planning creates strategies such as knowing when to defer or accelerate income. For example, if your tax planner expects you’ll be in a lower bracket next year, they may advise you to defer income to next year because your tax bracket will change, and you’ll pay taxes at a lower rate.
Tax planning also explores several options for setting up or contributing to retirement savings that can reduce taxable income for both you as the business owner and your employees. A tax planner can help you maximize your contributions, whether you set up a 401(k) plan before the end of the tax year or missed the cutoff.
Partnering with a tax planner also means having someone on your side to keep you updated on all the tax code changes that apply to your business. Your business may be able to take advantage of tax reforms that provide deductions for specific industries. In times of crisis, the government has passed legislation to help small business owners specifically. These include employee retention credits, paid leave tax credits, sick and family leave credits, or charitable deductions for donated inventory.
At Golden Tax Relief, we provide expert tax planning services to small business owners who are too busy to understand the complexities of tax planning. With decades of experience and tax code knowledge, we can help ensure you’re not overpaying your taxes and are rewarded with financial stability. For expert tax planning advice, click here for a consultation or call 844 229 8936.