AuthorMegan Schwan is the CEO of Sidekick Accounting and sister company Your Accounting Sidekick. She is the solo-Mom to four amazing kids. When she is not striving to change the world of small business, she enjoys exploring new places and activities with her kids! ArchivesCategories |
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What is Tax Planning?10/19/2021 Tax Planning is the process of taking the complete view of your entire financial situation or plan and optimizing on the use of every allowance. This is to ensure your tax liability is as small as possible and your tax savings are as large as possible. The total list of deductions, allowances, and tax opportunities is probably greater than you could imagine. The goal of tax planning is to become as tax efficient as possible. A built-in biproduct of proper tax efficiency is the tools, resources, and funds to plan and save for your future. Up to your retirement, and beyond! Focused planning can even provide financial security to share with the next generation. Where do I start? Although it is never too early to start tax planning, most experts agree there is a sweet spot. They suggest small business owners perform formal tax planning sessions the middle of each year.
The first step is deciding on the best type of planning for you. Whether you are doing the tax planning yourself or you choose an accountant with years of tax experience, a Tax Planning Sidekick (ahem... ahem) to help you with it, the planning starts with understanding the different areas of tax planning. What are the top tax planning areas of opportunity? Types of businesses and their tax opportunities - Hype in the type There is an area of tax planning that focuses on your type of business. Each type, whether it be a sole proprietorship, partnership, C corporation, or S corporation, has its own tax liability situations as well as opportunities for tax savings.
How accounting methods affect tax planning Will that be cash? Your business choice of accounting methods makes a difference. Whether you operate your business as cash method or accrual method, there are opportunities to leverage timing of billings and payments.
Tax advantages of hiring family members All in the Family Another area involves wages paid to family members. Paying wages to dependent children or a spouse can reduce your tax burden.
Tax savings with Investment and Retirement accounts Making bank and filling your tank Investments and retirement contributions can play a very large role. They can shift tax liability to the future or in some cases be leveraged for total tax avoidance.
Other (not as obvious) tax advantages So many opportunities, so little time! Additional tax credit opportunities available. There are several tax credits out there for small business owners like you. Too many to list, but here is a taste.
As your Tax Planning Sidekick, I am always ready to answer any questions you may have. Contact me today! megan@sidekick-accounting.com
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