The biggest tax return mistake that individuals and small business owners make is failing to do proactive tax planning. There is little that your CPA or tax preparer can do with a shoe box of receipts or your computer file on April 15th. After the first of the year, there are only a handful of maneuvers that can be done that will actually lower your tax liability. The time to start planning for taxes is early in the tax year - not after the tax year is complete.
Look at how a defense prepares for a football game. Obviously, they practice hard on the field and pay attention to fundamentals and improving their skills. They also spend a good deal of time watching film of their upcoming opponent. They want to know every potential play that might be thrown their way and be prepared to defend against it. If there is a hole in the offensive line that can be exploited to their advantage, they look for it.
Tax planning is similar to that of how a football team prepares. You want to know the fundamentals. Examples of fundamentals would include how you keep up with your expenses and record them, or how you track your business mileage. The fundamentals are the basics of running a tax savvy business.
Tax planning takes the fundamentals a bit further and can be compared with a football teams reviewing of game film and preparing for the game in advance of game day. Tax planning is your financial defense. Proactive tax planning is about giving you a plan for minimizing your taxes. What tax strategies should you adopt now to minimize your tax bill at the end of the year? Are there better ways to structure the financial side of my business that would result in me spending less in taxes?
Some individuals and small business owners are afraid of tax planning because they think it means using aggressive strategies so that they can pay less in taxes. In reality, proactive tax planning is not aggressive at all. It simply involves analyzing the tax code and and individual or small business owners personal tax situation to make sure that they are using every legal strategy for minimizing their taxes. For most people, taxes are one of their largest expenses. It only makes sense to focus on a financially defensive strategy to minimize your largest expenses. Contact a proactive tax professional today that can help you to minimize your tax liabilities before it it too late.
Chad Bordeaux is a Charlotte CPA who works with small business owners and individuals on a monthly basis to provide them with proactive guidance and advice on how to grow their business, minimize their tax liabilities and grow their bottom line. Contact Chad through his firm's website today so that they can help put your small business on track to meet its goals. Chad is also a primary contributor to the Beancounter Ramblings blog which focuses on issues important to small businesses.
