Tax planning refers to the process of looking at different tax options in order to identify when, whether, and how to best conduct a business as well as personal transactions for reducing or eliminating tax liability. Many small businesses ignore tax planning but this is an ongoing process and getting a good tax advice is very important. Regardless of the size and type of your business, it is beneficial for you if you have a regular meet up with your tax advisor or CPA at least every quarter so you can discuss and review your monthly expenses and income, taking advantage of the provisions, deductions, and provisions that are legally available for your business.
Keep in mind that although there are ways to reduce or eliminate your taxes, performing tax actions with deceit, concealment, or subterfuge is illegal, but tax avoidance planning is completely legal. What makes tax evasion different from tax avoidance is that the action is fraudulent. The different areas that IRS examiners check when ruling out possible fraud includes accounting irregularities, and improper allocation of income. Failure to report a shareholder’s dividends or a store owner’s portion of daily business receipts is a fraudulent action that constitutes tax evasion. Travel expenses that are overpriced or stated and a large reduction in the taxpayer’s claim for charitable contributions are also fraudulent activities that may lead to tax evasion case. It is important to keep sufficient financial records and financial statements, and don’t hide or conceal anything to IRS, otherwise, it may be considered a fraudulent tax avoidance warranting tax evasion. Allocating income to a related taxpayer in a lower income bracket where a company makes distributions to the controlling children of the shareholder is also fraudulent.
There are countless planning strategies available to small business owners, and by hiring the services of a tax professional, you can be assured that you won’t need to face any legal charges pertaining to your taxes. The different tax planning goals that a professional can help you with include reduction of taxable income, tax rate reduction, control time tax payments, claim of available credits, control effects of Alternative Minimum Tax, and avoid the most common mistakes of tax planning. Proper planning is important when estimating your business and personal income for the next few years. We provide accounting services and tax planning services to our clients in Foxborough. Getting a professional tax planning professional can help you in developing tax planning strategies that are legally acceptable and recognized. It is our dedication, commitment, and passion to provide excellent tax planning services to our clients in Foxborough and its surrounding areas with full confidence and expertise.