Many business owners think about taxes when it is time to prepare their tax return. But tax preparation and tax planning are not the same thing.
Tax preparation looks backward. It reports income, expenses, and other financial activity that has already occurred. Once the year is over, many opportunities to make meaningful changes may also be over.
Strategic tax planning looks forward. It considers where your business is today, where it may be headed by year-end, and whether there are planning opportunities that should be evaluated before the year is complete.
Why Mid-Year Matters
A lot can change in a business during six months. Revenue may be higher or lower than expected. You may have hired employees, purchased equipment, added a new business, changed compensation, or experienced significant changes in cash flow.
Your estimated tax payments may also have been based on assumptions that no longer reflect your current financial picture.
Mid-year provides an opportunity to review what is actually happening before you reach the end of the year.
Good Planning Starts With Good Numbers
Strategic tax planning also requires reliable financial information. If your bookkeeping is months behind or accounts are not properly reconciled, it can be difficult to accurately evaluate profitability, project income, or identify appropriate planning opportunities.
That is why bookkeeping, financial reporting, and tax planning should work together.
And tax planning isn’t simply about finding deductions. A strategy should make sense for both your tax situation and your business. Spending money solely to receive a deduction, for example, may not be the best decision when the business needs cash for other priorities.
Don’t Wait Until Tax Season
By tax season, we’re largely reporting what already happened.
Mid-year strategic tax planning gives business owners an opportunity to ask a much more valuable question:
What can we do before year-end to make better financial and tax decisions?
Your Accountant LLC works with established business owners seeking proactive tax planning, accurate financial information, and ongoing advisory services.
Request an Introductory Meeting to learn about our services and determine whether they are the right fit for your business.
The introductory meeting is for service and fit assessment; tax advice and recommendations are provided through paid engagements.
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