When I talk to prospective clients one of the first questions I ask is: What have you done in the past for TAX PLANNING?
The response usually is that they plan to pay their taxes on time.
The unfortunate truth is, most small businesses have never actually done tax planning, and are unaware of the importance and benefits that come from having a proactive tax plan..
In the past I often wondered how tax planning is skipped over, especially when you have successful business people and qualified accountant willing to serve them. I have come to realize that a lack of tax planning comes from a communication gap that occurs between business people and the accounting industry.
This communication gap occurs because the accountant assumes clients are going to call when they have a question and the business people assume the accountant is going to call if they see a problem. This does happen, but it is a reaction to something that is going on in the business. Real tax planning is about being proactive, and scheduling a time for a discussion or meeting on a regular basis to avoid getting into a circumstance that requires emergency response or a challenging surprise.
So, what exactly is tax planning and why is it so important?
TAX PLANNING IS:
- Compiling and reviewing accurate financial information on a regular and consistent basis, monthly is recommended.
- Being engaged with your accountant and/or advisory team at least 2-3 times a year to discuss business goals and opportunities.
- Using an accountant that can operationally support your goals and who understands the planning process.
- Knowing that your accountant is staying updated and engaged in the changes that affect you. Your accountant should be using educational tools like, newspapers, books, business professionals, seminars and associations in order to help guide your business through the maze of complex business and tax laws that are updated continuously.
- Executing your plan. It is a very rewarding feeling when you are comfortable about your plans and know they are designed to meet your personal and business goals. Creating and executing this plan will help foster the business toward greater success.
ADVOCATE FOR YOUSELF AND TAX ACTION!
The tax code is vast and complex, the best way to create a tax favorable environment for yourself is to keep communication open with your team of advisors.
Be aware, even if you are not making money you still have tax planning opportunities. These can often be the most overlooked. For example, retirement funds can be converted to Roth retirement accounts and little or no tax paid on the conversion, if proper planning is done.
The last 3-4 months of the year or the most optimal planning time, so contact your accountant or advisory team today and ask to schedule a planning meeting.