It’s April, which means we are wrapping up another tax season. And while you may be tempted to believe you won’t have to think about taxes again for months, there is actually no better time to start tax planning than early in the year.
Working with your CPA to implement a tax plan early in the year can benefit you in multiple ways, such as:
- Reduce errors and save time. Having a solid tax planning strategy in place from the start of the year reduces the likelihood that you will have errors the next time you file. It also ensures you have a long-term view of your tax liability and investment goals. Remember that taxes shouldn’t be viewed in isolation. They should be a part of your overall financial picture. With this in mind, your CPA can ensure you have policies and procedures to account for any changes in the upcoming tax season, which will streamline your tax filing process for next year – and save you time and money!
- Work toward investment goals. Knowing your estimated tax liability and planning for it gives you an accurate picture of what funds you will have remaining to devote toward building your business or investing for retirement. Therefore, meeting with a CPA now can help you put into place a monthly target to set aside for taxes and investing. And this method is far better when you contribute to a retirement account, such as a Roth IRA, since the earlier you can invest those funds, the greater the chances are that they will grow through the power of compounding interest.
- Reduce your tax liability. One of the big goals a CPA can help you with is reducing your overall tax liability. In addition, a CPA can help ensure you are utilizing all applicable tax deductions, credits, and other provisions that can reduce what you owe. And learning this information early ensures that you leverage these strategies from the very start of the year.
- Reduce the risk of noncompliance. Tax laws can change frequently, and since most small and mid-sized business owners aren’t tax experts, it can be easy to overlook a change in tax law. However, overlooking something may sound small, but it could result in large penalties or fines, which eat into your profits. Working with a CPA early in the year ensures that you are accounting for any changes in tax law and will remain compliant throughout the year. This benefit saves you money that could be potentially lost on fines.
- Plan for growth. If your business is in a growth phase or you want your business to grow more, meeting with a CPA is one of your best options. These professionals can help you understand the tax implications associated with growth and the expansion of your operations. Knowing this information before you expand your operations can help you optimize your strategy. As a result, you can make informed business decisions that don’t inadvertently penalize you for taking your business to the next level.
- Make important decisions. As a business owner, you may need to make important business decisions that will shape the next year for your company. A CPA can help you make better decisions related to the following topics, among others:
- Major equipment purchases
- New facilities for growth
- Upgrades to your vehicle fleet
- Employee bonuses
- Charitable donations
- End-of-year invoice collections
Because these decisions have serious tax consequences, it’s a good idea to make them with the input of a CPA. This process helps you understand the full financial implications of any major financial decisions.
There is no doubt that tax planning is a vital component for all business owners. Without a comprehensive tax plan, you may end up paying far more than your actual tax liability. And few businesses can afford to do this year after year, especially in competitive markets.
Therefore, your partnership with your CPA can be one of your biggest competitive edges. A skilled CPA can help you understand your tax liability, plan for it, ensure compliance with tax laws, support long-term investment, and help make decisions that will keep your business thriving.
It’s a team approach that helps secure your company’s future. You simply cannot afford to skip tax planning and deal with it only when the filing date approaches. To learn more about tax planning for your company’s success, contact Parker Business Consulting today!
Parker Business Consulting & Accounting, P.C. is a unique firm with more than a combined 75 years of experience in private industry, coupled with a strong background in public accounting. This combination enables us to provide valuable assistance based on direct experience with many of our clients’ same issues.