If you’re building a business today, you need a tax strategy. A tax strategy can save you money, even if you’ve spoken with a tax planner in previous years because tax laws change. The tax laws change and your strategy should change too. Using a 2017 tax strategy in 2019 makes little sense. Not all businesses benefit from having a tax preparer, but all companies can benefit from a Tax Planner.
Benefits of a Tax Planner
When was the last time you spoke to a tax planner? I like to think of it as the difference between going to a mechanic and taking your car to the family friend. When you bring your vehicle to the family friend, they fix the problem, usually for a lower price. It might save you money initially, but how much will it save you over the long run?
At a mechanic, the shop will run a full diagnosis. Usually, something else is wrong, that you didn’t come to fix. We call this preventative maintenance. Preventative maintenance can do two things; keep performance at optimal levels and prevent further injury.
If it’s going to cost you more money than the initial quote, the easy decision is to wait. In life, you have easy and hard choices; the easy decisions create harder outcomes, and the harder decisions create a smooth result.
Spending more money is hard, especially when it’s unplanned, but are we investing or spending? Investing can help your future self while spending takes away from you.
The harder decision means we need to spend more money, which leads to less for us in the immediate timeline. The brain human brain was not built to delay gratification. James clear refers to this as time inconsistency. You can read that article here.
Time inconsistency means that as humans, we value immediate rewards more than future rewards. If you want to stop procrastinating, make the rewards present.
Immediate rewards can affect
your decision making in negative and positive ways.
The key is to pair instant rewards with our investment, so we get something. That’s the great thing about a tax planner.
You might be wondering how you can save money, and it’s easier than you think.
A tax planner doesn’t need to wait until you file your taxes for a reward, they can save you money, just from planning.
That’s the most significant difference in a tax planner and a tax preparer; one has a plan to prepare your taxes and the other strategizes to save you money. Even if you’ve spoken to a tax planner, it benefits you to have one on your team.
Do you have a tax strategy for your business?
Having a tax strategy for your business isn’t easy unless you keep up to date with all the changes to tax laws. Consider the current tax laws, are you using them to help reduce your taxable income? It’s unlikely, but that’s not your fault. Most of us don’t understand our taxes.
We can use our tax filing as an example. How many people do you know get excited when they get a refund? I was one of those people, so don’t be ashamed if you’re too. Receiving a refund from the IRS means that you paid too much in taxes throughout the year. Remember that week when you needed an extra few hundred dollars? Yep, taxes, that’s where they went.
The best way to see it is like this; that money could have sat in a savings account accumulating interest, but instead, the United States government collected the interest and paid you the difference. You can adjust your withholding through your payroll company to change the amount of taxes deducted. As an individual, you don’t receive many tax deductions. As a business, it’s how you choose to plan for your taxes. To find out how much you can save on taxes, contact us.
Understanding strategy through chess
A strategy is understood best through the game of chess. Chess grandmasters are some of the greatest strategists to never serve in the military. You don’t need specialized training to become a strategist. You already have everything you need. Strategies can be offensive or defensive, but a chess grandmaster will know how to use both. Chess players study thousands of moves; we can do the same thing. The history of thousands of successful business owners is littered across the internet today.
Information is just one part of a strategy, planning for victory, and acting is the most critical parts. You can follow this cycle, but until you get the last part, no change will occur. For instance, new tax laws are information. A tax planner can help you plan for victory; you have to act. If you don’t believe you can accomplish the task at hand, outsourcing is your best strategy.
What can Sun Tzu teach me about Tax Planning?
Sun Tzu is regarded as one of the greatest military strategists of his time. Through his teachings, you can build a strategy, one that has a path to absolute victory.
Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.
A strategy is planning for taxes while tactics are how you plan on getting the money to pay for your taxes. If you save on your taxes, you’ve already followed in Sun Tzu and made victory easier. If you only plan on paying them, you may not like the final price.
The natural formation of the country
is the soldier’s best ally.
It is critical for you to be knowledgeable about the landscape you operate in than anything. Your most significant advantage can be the knowledge behind a business. Unfortunately, we don’t maximize this landscape. Businesses have more tax deductions than a person. The key is understanding how the tax laws change to adapt your business to the current landscape.
The general who wins the battle makes many calculations in his temple before the battle is fought. The general who loses makes but few calculations beforehand.
The statement is simple; you either run your business or your business runs you. Understanding your business metrics is essential. Your metrics are the quantifiable numbers you use to measure your failure or success. Your profit report, cash flow statement, monthly projections, bookkeeping duties, accounting analysis, tax planning, all of it adds up to the calculations you make.
There are not more than five musical notes, yet the combinations of these five give rise to more melodies than can ever be heard.
I like this quote most of all because it expresses the potential behind your business. Behind all little actions is something that can benefit you. Amazon began selling books door to door. They now run the biggest online shop in the world.
Disney started with steamboat willie and now owns more media production companies than venues or attractions.
You may think your business is simple, but the reality is that the complexities exist and they can be changed. The reason some of these more prominent companies don’t pay taxes is that they plan for it. The combination of how you choose to use your tactics can create a strategy that assures your victory, that’s what we want.
Do I need a tax strategy for my business?
Yes, having a tax strategy for your business helps. All savings help but depending on the different mechanics of your business. Your tax deductions may differ. But having a tax strategy can help get you into the habit of planning your taxes. Tax laws can change yearly, so should your approach.
How can I benefit from a tax strategy?
Your tax strategy will benefit your business in multiple ways; you’ll continue to save money, even though taxes will continue to increase. Think about it if roads need fixes, taxes. Any new programs the government is creating taxes. Who pays those taxes? We do. Notice how many people complain about taxes, but how many of them plan for taxes?
As taxes increase, you will benefit more from having a regular tax planner.
Two ways to save taxes
The two easiest ways to save on taxes are claiming credits and deductions. Claiming a tax credit reduces the amount of taxes you owe to the IRS. If you owe $4,000 and claim a credit of $1,000, you owe $3,000 on your taxes. Common tax credits are the Earned Income Tax Credit, the Child, and Dependent Care Credit, the Child Tax Credit, and other tax credits for education.
Where else can strategy help your business?
Strategy can help save you money on taxes, but there are many other facets of your business that benefits from strategy. How you train your employees through continuous self-development is a strategy. Your company policies and procedures are smaller parts of your mission. Strategy applies to anything, and it should apply to most things.
A bookkeeping strategy will organize your financial documents. An accounting strategy can change the way you view your bank account ultimately. Strategy can help the way you recruit team members and build partnerships.
Can strategy help my personal finances?
If you’re having problems with personal finance, speaking with a financial coach can tremendously help you. Strategy can improve your finances because it’s going to take more than a plan. Each decision we make is an emotional decision, so it’s up to us to understand why we’re choosing the things we are. Usually, personal financial problems are not a result of one thing. It takes terrible spending, debt, living out of our means, and behavior that doesn’t support us building wealth to cause problems.
How does a bookkeeping strategy help my business?
A bookkeeping strategy will help your business by controlling your cash flow. An excellent bookkeeping strategy has procedures in place to cover accounts payable and receivables. Bookkeeping strategies will help keep your ledger up to date and accurate. Timely and accurate reporting allows you to make faster decisions. The strategy doesn’t just impact one thing. It affects the outcome.
How does an accounting strategy help my business?
An accounting strategy can help your business in multiple ways. Each week you’ll have a new problem. It’s the duty of being a business owner; all of the issues fall to you. Financial issues are the same way. Each financial problem you face will be a new problem. How you tackle each issue is essential and should contain a strategy that protects your business. The approach is a plan for certain victory, in accounting that’s what you want.
Am I paying too much in taxes?
Most businesses are paying too much in taxes, and it’s because of a lack of strategy — one of the most commonly asked business questions listed in our article here. A tax planner can help you answer this question, not every situation is the same, and the tax laws don’t stay the same. With different variables, you need to be highly involved to determine if you’re maximizing your tax deductions because likely, you’re already paying too much.
Common tax problems you will encounter
These aren’t common tax problems if you’re prepared, but even, so they’re enough to cause your stomach to drop. One of the most common tax problems we run into is when our owners receive an IRS Audit letter in the mail. But remember since our team has kept the books ready all year, your inspection is going to be a breeze.
Non-filed tax returns are another problem. Failing to file your tax returns is a criminal offense. If you wait, however, the IRS will fire for you. If you find yourself with previous non-filed returns, your best course of action is to file them as quickly as possible. When you know your debt, you can set a course to pay off the amount.
Back taxes from previous years. You might think that you’re okay because you filed but failing to pay fees and penalties can add up over time. Ultimately back taxes will come back to haunt you if you don’t pay them on time.
It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.
Where can I find changes to the tax code?
Any changes to the tax code can be found on the IRS website here. Some of these terms may be unfamiliar to you and if you feel would like assistance in understanding these tax changes. Please reach out to us.
If you’ve never spoken to a tax planner, your business can benefit from implementing a tax strategy. The greatest leaders of our time all shared one thing, they were great strategists. Building an approach might be exactly what your business needs. Financial strategies will save you money, but we need to plan and adapt to the changes that occur.
Paying taxes isn’t an option but minimizing the taxes you pay is. Income is one of the most powerful tools we have, and maximizing how we use it will benefit us for years to come.