Importance of tax planning for your business

When you own a business, paying taxes is your obligation. However, you should never be surprised by how much you owe. Understanding how your taxes work and calculating how much you have to pay each quarter or year is essential to ensuring you have enough money or a surplus to spend elsewhere in the business.

When you invest in tax planning, you accomplish: First, you pay accurate tax estimates. Second, you reduce the risk of forgetting to file and pay taxes on time, leading to unnecessary fees and other penalties. And last but not least, tax planning can help you find money in tax deductions, credits, or other areas you otherwise may miss entirely.

Other benefits of tax planning include:

? Lower tax rate: It may be possible to lower your effective tax rate and reduce your tax burden using strategies that aren’t widely known.

? Reduce taxable income: Reduce the amount of income that gets taxed, with or without a change in the tax rate.

? Flexibility in paying taxes: Manage cash flow and minimize unnecessary fees and penalties by scheduling quarterly estimated taxes.

? Tax credits: Take advantage of tax credits that benefit your business and reduce your overall tax bill.

The reality is that business taxes can be complicated. Plus, tax laws often change over time and from one region to another, and many regulations apply selectively to certain scenarios and business types.

If you hire a trusted tax & financial adviser who is well-versed in tax strategies, that person will be able to flag any most relevant updates to your business. The more legal loopholes they can find, the more you’ll be able to save, so it’s important to consider getting help here.

Save taxes by being proactive—not reactive

Many small business owners are familiar with reactive tax planning. You monitor your sales throughout the year and keep your expenses under control, so you don’t break the bank. And at the end of the year (or quarter), you crunch these numbers to figure out how much you owe in taxes or lock your working capital in inventory or fixed assets.

While reactive tax planning can help your business reduce its taxes, it isn’t the most effective method for your business. It can lead to a last-minute rush where you miss additional deductions and certain credit benefits. You also risk bringing in an advisor who isn’t familiar with your business’s financial picture over the previous year, putting the onus on you to ask the right questions.

You’ll succeed better if you ditch this method and consider proactive tax planning.

Proactive tax planning is strategic tax planning for business. It gives you more freedom throughout the year and at tax time. It’s also key to making your business more profitable and growing your wealth in the long term. It works by looking at state and federal tax laws ahead of time and working within them, curbing your tax liability at the end of the year.

Enlist the professional advisory services of Focus CPA Group Inc (Call 562-281-1040) to get the most out of proactive tax & financial planning. We work closely with you to ensure we don’t miss valuable strategies or other ways to make your business more tax-efficient and via our financial planning team grow your net worth.

Is tax planning worth the extra cost?

Paying an additional cost when trying to reduce your overall expenses may not be an attractive option at first glance—but it’s important to note that tax planning is an investment.

As mentioned earlier, tax planning and advisory services may cost you more than basic tax preparation. However, the savings can far outweigh the initial cost. We at Focus CPA Group Inc have found that business owners are either mickey mousing their numbers to reduce taxes or overlooking the savings the legal tax codes provide by substantial amounts in potential business tax deductions and credits. We at Focus CPA Group with our team of tax and financial advisors will not break the law but use the tax laws and tax codes to your advantage and were thus far overlooked. Tax planning also provides audit defense.?