Working with an accountant has several advantages, one of which is planning for the future. Our goal with our tax planning services is to maximize your tax deductions so you can save the most money possible. In addition, we ensure that you only pay the taxes that are required.
You must be more aware of your tax situation to keep more money in your pocket. Here are some ways that tax planning services can save you money.
Tax Planning Vs. Compliance
Simply put, tax compliance refers to the act of filing your taxes following the law. If you’re filing personal taxes, this means either meeting the deadline or filing a request for an extension. Compliance with the tax code does not take into account all of your options. Only you are responsible for ensuring that you and your company have taken advantage of all possible credits and deductions. The decision owner is you and your accountant.
Here is where tax preparation comes into play. It’s a thorough examination of your tax situation, as well as the deductions and credits available to you and your company. Your tax situation changes whenever something significant happens in your life. If you own a business, this is the same.
Even though most tax software has an “interview” function that asks many questions about your tax situation, you won’t be able to try out different scenarios to see which one is best for you if you don’t know all the tax laws. There are several methods for calculating business vehicle expenses, for example. You can use the mileage rate or the actual vehicle expenses incurred, pro-rated for business use. A little tax planning and forethought can help you decide which method is best, but you may face a tax audit if you use both methods or incorrectly calculate your vehicle expenses.
Tax Planning Services
Tax planning services enable you to gain a better understanding of your tax situation. The ultimate goal of tax planning is to manage your tax situation to pay the least tax possible. Depending on the accountant you hire, tax planning can be done in various ways, but it’s challenging to do on your own unless you’re familiar with the tax laws and calculations required to estimate your taxes.
Running various scenarios is one way to manage tax through tax planning services. And this applies to both individual and corporate tax situations. Based on your previous year’s tax situation and any changes during the current year, your accountant will calculate your tax liability using the various options available. Suppose you’re unsure whether you should pay yourself a wage from your business, for example. In that case, your accountant can run comparison scenarios for you to see how this decision will influence both your business and personal tax returns.
How Does Tax Planning Save Money?
You’re missing out on money-saving opportunities if you only see your accountant once a year during tax season. In addition to the criteria that must meet to benefit from government incentives, many have deadlines. You may lose tax breaks if you miss the deadline, resulting in less money in your pocket.
Who Should Take Advantage Of Tax Planning?
Tax planning services are beneficial to everyone, but the more complicated your tax situation is, the more likely you are to benefit from them. For example, while being a business owner provides more opportunities for tax planning than being an employee, you can still profit from tax planning as an employee.
Individuals with a high net worth can benefit from tax planning by timing the sale of their investments to minimize capital gains tax liabilities. There are also tax planning opportunities regarding the timing of charitable donations and gifts to family members.
Tax planning can also help those who are nearing the end of their lives. There are several ways to reduce estate taxes so that you can leave more money to your loved ones after you pass away.
You have a variety of tax planning options depending on how your company has set up. For example, a sole proprietor has fewer options than a corporation, but that doesn’t mean they shouldn’t talk to their accountant about tax planning options.
Our Tax Planning Services
At Sidhu accounting, we believe that tax compliance and tax planning work best together. We stay current on tax laws, so we’ll always be aware of any changes that may affect our clients’ tax situation. Sidhu Accounting doesn’t just file your tax return; we maximize it so you can save the most money.
Because personal and corporate taxes are both affected when you own a business, we provide tax planning services on both a corporate and private level. If you’d like to learn more about the tax planning options available to you, fill out this form to schedule a free consultation.