Tax planning is essential for all businesses in the U.S. in order to ensure compliance and avoid hefty penalties. Remember, tax planning is not the same as tax-preparation (which is obviously just as important). Tax planning refers to the process of strategizing in terms of exactly what needs to be filed and which records need to be retained, as well as what deductions can be taken advantage of and which credits can be incurred. Tax-preparation, on the other hand, refers to the process of arranging your taxes for annual filings.
With that in mind, here are a few helpful tax planning tips for small businesses, courtesy of Georgen Scarborough Associates.
Seek out Assistance
As the owner of a small business, you probably have a finger in every pie. In short, you have a lot on your plate and probably will not have enough time to dedicate toward the management of the financial aspect of your business. This is why it is strongly advised to partner with a tax advisor or CPA who can take over in this regard and assist in reducing the tax burden.
Stay on Top of Deductions
Make the most of the deductions available to you by ensuring that you keep detailed records of all related and relevant business expenses for audit purposes. You will need to hold on to the original vendor invoices and other receipts to prove that the expenses were made for business purposes, and not for personal gain. Bank statements will rarely suffice.
Keep up to Date with Tax Law Changes
Tax laws are changing all the time! So, it is essential that small business owners keep abreast of how and when these changes are taking place – even if you work with a tax advisor. The IRS website is a wonderful resource for this kind of information.
Looking for CPAs that you can count on for optimized tax planning? Look no further than the experts at Georgen Scarborough Associates. Contact us today.