Year round tax planning is key to less stress during the tax season! Let’s face it almost everything we do in business has some sort of tax implication. So, why should we wait until tax season to start planning? That is not the best use of your time and you could be losing money because of it! I like to advise clients to implement a tax plan that you can work year round! The ideal will be a tax plan set up and ready to go by December 31st of the year before the new tax year starts. However, I know that with entrepreneurs and small business owners this may not be feasible. If you haven’t created a tax plan for 2011, please do so within the next couple of weeks. It doesn’t have to be a complicated plan, but it should be a plan that makes sense, structured to fit your business, and one that you can stick to, and one that helps you keep as much net profit in your business as legally possible.
What Does it Mean to Have a Tax Plan?
This simply means just incorporating tax strategies throughout the year in an effort to minimize potential tax liability and to increase your level of tax savings. The tax plan also helps you to take advantage of tax breaks that you may be entitled to. These types of strategies could be as simple as implementing a time towards the middle or end of the tax year in which more money is spent on “necessary” equipment, computers, software,etc.; contributing to a retirement plan or benefits plan; paying wages to family memmbers; implementing growth strategies, etc.
Here are a few more tips of what can be done on a daily basis that can be performed as part of your tax planning:
1.) Keep your business financials in order
2.) Create a regular schedule for accounting responsiblities such as bookkeeping and filing
3.) Monitor your net income on a regular basis
4.) Keep your business and personal financials separate
Please note that before implementing any tax strategies, have a meeting with your CPA or other trusted financial consultant to determine what’s best for your business.