Looking ahead is always good advice when doing business and personal financial planning. And income taxes are one of those things that most businesses should probably give more attention to all year. Too many owners put off even thinking about taxes until year-end or just before the filing deadline. Like their investing, their tax planning should be a year-round issue.
Business owners pay their taxes all year long, so they should be focusing on tax planning all year long. That doesn’t mean owners should make financial decisions based solely on tax considerations. But it does mean they should never make important financial decisions without at least considering the tax consequences.
Business owners adverse to advance planning mistakenly think of taxes as simply a once-a-year affliction caused by the need to grapple with their 1040 forms. Contrast them with savvy owners who factor taxes into their planning throughout the year and stay on top of continual tax law changes.
Businesses with the foresight to plan ahead can avoid missed opportunities and capitalize on scores of perfectly legal opportunities to lower their taxes.
Owners should start early on their planning and leave enough time to implement strategies that can generate dramatic savings – maybe thousands of dollars – for 2015 and even give a head start on 2016 and later years. They reap these savings only if they complete their maneuvers by Dec. 31.
Owners oblivious to the calendar forever forfeit such opportunities to reduce taxes for 2015 and 2016, though they still have until their filing deadline for 2015’s return to make deductible contributions to tax-deferred retirement arrangements, such as traditional IRAs and simplified employee pension (SEP) plans.
Subtractions that add up. When Form 1040 time rolls around, overlooked write-offs can cause owners to pay more taxes than legally required. Even small deductions can add up to surprising savings. Yet year in and year out, many millions of business owners routinely fail to claim perfectly legal deductions, thereby needlessly enriching Uncle Sam.
What is the main reason deductions are missed? Poor recordkeeping. Who trims their tax tab to the legal minimum? The folks who keep the best records.
To help avoid missed opportunities, we publish a complimentary monthly electronic newsletter, TAX TIPS NEWSLINE, that provides comprehensive continuing education, timely insight on a wide range of taxation issues, latest updates and changes to tax codes and how to apply them. In addition, after clients complete an intensive proactive tax strategy evaluation process, they will move into a tax maintenance plan to ensure that they will never overpay taxes again.
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IRS regulations require us to advise you that, unless otherwise specifically noted, any federal tax advice in this communication (including attachments, enclosures, or other accompanying materials) was not intended or written to be used, and it cannot be used, by any taxpayer for the purpose of avoiding penalties; furthermore, this communication was not intended or written to support the promotion or marketing of any of the transactions or matters it addresses.