Tax planning pertains to the process of studying different ways involving tax management to determine how to conduct personal transactions or business to reduce or eradicate tax liability. Many small businesses ignore tax planning but this is an ongoing process and getting a good tax advice is very important. Whether you have a small, medium, or large business, it is your greatest benefit to review your monthly income and expenses, and regularly meet with your tax advisor or CPA every quarter to make an analysis on how you can take full advantage of the credits, provisions, and deductions that are legally available to you.
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. Any tax action with a fraudulent intention is tax evasion. The IRS examiner checks four different areas for any possible fraud such as accounting irregularities, failing to report substantial amounts of income, claims for improper or fictitious deductions on a return, and improper allocation of income. An example of fraudulent action is failure to report a part of daily business receipts or shareholder’s dividends. A tax evasion case may also be charged if there are overly priced travel expenses as well as large deduction for charity donations without proper documents presented because these are fraudulent in nature. If there are accounting irregularities such as failure of a business to keep sufficient records or any discrepancies in the tax return and financial statements, these can also warrant fraudulent transactions or tax evasion. An example of improper income allocation is distributing earnings to a lower tax bracket taxpayer such as the shareholder’s children.
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. When it comes to tax planning a professional can help you in avoiding the most common mistakes of tax planning, reducing the taxable income amount, lowering tax rate, controlling time for tax payments, claiming tax credits, and controlling the Alternative minimum Tax effects. Proper planning is important when estimating your business and personal income for the next few years. We are a tax planning and tax returns professional who can help you with your business. Getting a professional tax planning professional can help you in developing tax planning strategies that are legally acceptable and recognized. Our tax planning professionals are passionate, committed, and dedicated to providing the best tax planning services to our clients for Foxborough.