We are already 20 days into the 4th quarter of the ongoing tax year,
meaning nearly 70 days are left until the ongoing tax year ends. As
a responsible business you are, you need to start business tax
planning now. While procrastination for a few more days (or even
weeks) seem perfectly fine now, any unattended tax work can have
dire consequences for your business in the future.
The fact of the matter is that timely business tax preparation can
help businesses plan ahead for cash flows, take advantage of various
tax-minimizing schemes and avoid penalties due to last-moment delays
among several other benefits. This is equally true for each entity
that pays corporate tax, including small business owners, S-Corps
and self-employed individuals.
It has been found that businesses who start business tax planning
early are less likely to commit errors/ mistakes in official
documents during the filing phase; hence, avoiding the hassle of
filing amended returns, penalties for late filing, and ultimately
achieving peace of mind.
It may be true because of the fact that early business tax preparation
means more time to sort documents and plan tax exemptions, better access
to quality tax accountants (as they are not as busy as they are during
the peak season), and more informed decision making related to tax
shelters.
Corporate tax planning during or before the 4th quarter becomes more
crucial for those self-employed individuals and corporations that are
likely to get a tax refund.
On one hand, timely business tax preparation allows timely tax refunds,
and, on the other hand, it reduces the likelihood for identity thieves
to claim your tax refund with fraudulent documents. The importance of
getting free cash in the form of early tax refunds is obviously well
understood by all businesses.
Now that you have been sensitized with the necessity of timely business
tax planning, there is a need to briefly go through some of the main
steps you need to perform in order to gain maximum out of your tax
planning. Remember that there may not be any hard and fast rule in this
regard, as the situation of each individual business varies
significantly, some of the main steps applicable in most situations are
discussed here.
Since it is still the last quarter, it could be hard to predict the
exact tax bill (or refund) at this stage. Hence, one of the first things
you could do at this stage is to prepare a forecast of income and
expenses for the last quarter, and to estimate your overall tax figure.
This may also indirectly help your business in budgeting for the next
year.
Once you are able to prepare an estimate of tax liability, you may want
to look for a tax shelter, which is basically a legal tax minimizing
strategy that uses a range of options and strategies to legally reduce
overall tax liability.
Employer-sponsored retirement plans (401K), municipal bonds and placing
assets into tax havens are some of the common forms of tax shelters.
Depending upon individual situations, a business may or may not want to
go for a tax shelter.
At this stage, you have already estimated your tax liability and some of
the ways you are going to minimize it. Now is the time to actually start
preparing your taxes. It is time for you to get organized and start a
filing system for your expenses.
See if you have any outstanding report that requires fixing. Make sure
all the required documents, reports and vouchers are readily available
and updated. Meanwhile, you may continue to work towards qualifying your
business for various grants and see if your business could avail tax
credits.
Last but not the least, if you ever feel overwhelmed during any stage of business tax planning or tax preparation, don’t be hesitant to find professional help like TakeAway Tax. In fact, the professionals at TakeAway Tax recommend a mid-year business assessment. Think you’re too late? Absolutely not! There is still time to make changes that will benefit your business. With a simple document upload system and a no hassle virtual service, our TakeAway Tax professionals will get you on the right track for your business.
A dedicated tax professional can help your business minimize tax bills and avoid penalties.
If you find yourself in need of professional help, you may want to contact one of our licensed partners for a one on one virtual meeting for better tax planning and business assessment.