Tax planning has been in the eye of the storm recently, owing to the many corporate scandals that have shaken the market. If you’re small business has franchisees in another country that makes tax planning even more difficult. To avoid problems with tax authorities, tax planning should be made as a part of corporate planning.
There are two aspects to corporate tax planning; legal and tax breaks. While every business owner wants tax breaks, tax planning should always be done, keeping the legality of it in mind.
Legal Tax Planning;
How to ensure that the tax breaks you are applying for are legal? How to ensure that your corporate tax planning strategies are not crossing legal boundaries? These are important issues in corporate tax planning, and here are some ways to address them.
1) Appoint A Tax Advisor
Your tax advisor should be able to guide you in tax planning, while ensuring that you unintentionally do not do anything illegal.
2) Detailed Report
Make a detailed report about your income to the tax advisor. This will help him or her take informed decision regarding tax-planning strategies for your business.
3) Customization
Tax strategies that fit another business may not fit yours. Customized tax planning enhances your business.
4) Records
Keep proper records of the tax-planning document so that you can revise them and go through them whenever you need to.
5) Ensure legality
Hire a lawyer and experience tax consultant when you draw up tax plans. You do not want the authorities knocking on your door for implementing aggressive tax schemes.
Once you have taken care of the legal issues of tax planning, you need to come up with a good tax plan. Here are some ways to save on taxes without crossing the legal barrier.
Tax planning: How to Save Taxes;
1) Capital Losses
If you suffer capital losses, then the tax will be calculated against capital gains in the next financial year. If you still suffer capital losses, then you can reclaim the taxes paid when you had capital gains on your business.
2) Share your income with a lower paid partner, so that he or she can invest his or her income and earn investment profits. Your partner will then need to pay just the investment tax.
3) Tax Breaks
Utilize all possible tax breaks. Most businesses are not aware of the taxes breaks that are available to them. Tax breaks are especially aimed towards the growth of small businesses.
The government has many special schemes and tax breaks for the benefit of small businesses. This reduces the need for aggressive tax measures that fall into the grey area. The best tax planning method is to keep it legal and utilize all the tax breaks that the tax authorities allow. If you need to know more about tax planning for your small business, you should consult a tax advisor who specifically counsels small business owners.