What is Tax Planning?
Tax planning can be defined as an arrangement of one’s financial and economic affairs by taking complete legitimate benefits of all deductions, exemptions, allowances and rebates according to laws and regulations to ensure that tax liability reduces to a minimum. Tax planning imply compliance with the taxing provisions in such a manner that full advantage is taken.
For a small business, minimising the tax liability can provide more money for expenses, investment, or growth. Even if you employ a professional bookkeeper or accountant, you should keep careful tabs on your own tax preparation in order to take advantage of all possible opportunities for deductions and tax savings, that’s where a tax expert can assist.
Benefits of Tax Planning
By engaging in Tax Planning, you can ensure that maximum deductions and write-offs are identified and you can minimise the amount of tax owed.
Relevant deductions, loopholes, and exclusions are studied with some rigour. Business Tax Planning involves taking stock of assets and estimating tax liabilities well in advance of payment deadlines. This gives you time to react and re-shuffle certain divisions or debts in order to capitalise on the expected tax breaks.
Taking advantage of a tax benefit at the earliest possible opportunity makes perfect sense. It saves you cash, which gives you the time value of the tax saved plus the immediacy of the benefit creates greater certainty for you.
Tax Planning Strategies
There are countless tax planning strategies available to a small business owner. Regardless of how simple or how complex a tax strategy is, it will be based on structuring the strategy to accomplish one or more of these often overlapping goals:
- Reducing the amount of taxable income
- Lowering your tax rate
- Controlling the time when the tax must be paid
- Claiming any available tax credits
- Avoiding the most common tax planning mistakes
Conclusion
As a business owner, you can reduce your business taxes by shifting and deferring income, taking advantage of business deductions, maximising the use of tax credits and incentives, by becoming familiar with business tax laws and regulations, keeping good records, and working with tax professionals.
Sincerely,
Gervase Mwango
- If you need advice on tax planning, why don’t you reply to this email and set up a discovery call with me, and let’s take it from there.