Treating taxes as an afterthought can lead to some expensive mistakes. People who fail to plan and end up paying more than they should on their taxes feel frustrated when that happens. There are a lot of ways to avoid these issues from arising, and tax planning is one of them.
Tax planning entails a financial strategy designed for tax efficiency. The goal is to reduce one’s tax liabilities and maximize the use of tax exemptions, tax rebates, and benefits. In addition, tax planning involves making financial and business decisions that reduce the tax burden. By taking advantage of all beneficial provisions under tax laws, you can legitimately reap the maximum benefits.
Tax planning involves a variety of considerations. Several factors are taken into consideration, such as the timing of income, the size and timing of purchases, and planning for other expenses. It is also important to select investments and types of retirement plans that complement a person’s tax filing status and deductions.
Without a sound tax plan, you might be surprised by unexpected tax liability. Thus, it is always better to take a proactive approach to your taxes and get them out of the way before the end of the financial year. Trying to evade taxes is not an option you want to consider. It can lead you into some serious trouble and result in penalties.
Benefits of Tax Planning
- Gain confidence
People who fail to plan and end up paying more than they should on their taxes feel frustrated when that happens. The process of tax planning allows business owners to gain a better understanding of compliance and how it works, to learn how to minimize tax, and to get more involved in the day-to-day operations of the company.
2. Staying ahead of the game
In a trust-based business, tax planning gives you an accurate estimate of the trust distributions before the deadline, so you don’t need to rush into a decision.
Knowing your tax liability through tax planning allows you to put funds into your business that otherwise would have been earmarked for taxes.
Planning your taxes is a great way to look at the options open to your business and refine its strategies in all areas while carefully examining its data.
5. Overview of the situation
The tax planning process provides the owners of a business with some great insights into the larger situation, including whether to alter the structure or where operations are occurring; to determine the potential profit areas which are presently untapped or unexplored; and to determine how best to structure investment decisions
6. Mental peace
Knowing your business’s tax liabilities in advance eliminates unnecessary stress and
uncertainty, allowing you to make decisions based on solid information.
Tax Planning Tips
Getting started with tax planning is easier if you do the following things:
• Develop business goals and set them in motion.
An organization that keeps accurate records is on its way to success. Establishing clear financial goals can also benefit companies. A vital first step toward financial freedom is determining the company’s goals and deciding on a certain amount of money to set aside annually for savings or investments.
• Get your finances in order.
Being organized and prepared is an important part of running a successful business. Even though it’s easy to get rid of receipts or not keep track of smaller expenses month over month, keeping records for tax purposes is essential. Tax-planning professionals will ask you for detailed information and records of all your financial accounts.
• Seek the assistance of a tax-planning professional.
Laws and programs about taxes constantly change. If a form does not exist before, taxpaying individuals are at risk of not filing it. An expert in tax planning thoroughly researches which forms are applicable and determines what changes are made each year.
What Taxaide Offers
The effectiveness of a high-performance tax function relies on access to and use of information and technology. Taxaide is well equipped to provide a wide range of tax management services with and without the integral use of its technologies. We develop strategic plans, including a tax plan that is broad-based and prioritized yet flexible enough to accommodate the complex nature of the Nigerian tax regime. Our tax professionals can help your tax function become less laborious and time consuming.
For further enquires on this bulletin or any other tax-related issues, you can contact 0700TAXAIDE