The Importance of Tax Planning

Written by Bryce Allen
Business PlanningTaxation
Portrait of young businesswoman wearing glasses while leading meeting with female business team in office

As we move into tax season, it’s important to remember that taxes should be brought into strategic business planning. Too often, businesses treat taxes as an afterthought, but by incorporating tax planning into your overall strategy, you can save money and ensure compliance with the law.

Tax season is upon us, and that means it’s time for businesses to start thinking about how they can optimize their tax strategy. Planning ahead is essential, especially when it comes to taxes — after all, the IRS isn’t going to give you any breaks just because you’re a startup. In fact, the opposite is true — the IRS expects startups to know the rules and play by them.

At Rooled, we believe tax season success depends on a strong strategic foundation. That’s why our services are rooted in strategic partnership approaches and relationship-based consulting. We strive for tax efficiency, cutting costs and ensuring tax obligations are met on time. Our experts have years of experience to bring to the table to provide informed decision-making and exceptional tax planning capabilities. Utilizing our unique methods, we can help you get your taxes under control this tax season and beyond.

Define tax planning.

Tax planning is an essential aspect of financial management that can provide significant benefits to individuals and businesses alike. At its core, tax planning facilitates tax savings and improves cash flow.

Why is tax planning important?

By assessing tax liabilities, tax advisors can recommend opportunities to maximize legal tax savings. These include deferring tax payments, managing capital gains and losses strategically, establishing tax-efficient investments, and crafting tax-advantaged retirement plans. Tax planning can also help individuals and businesses identify applicable tax credits or deductions that they might otherwise miss out on. In addition, it helps individuals prevent facing any penalties or fines related to tax non-compliance. With informed tax planning, investors can implement strategies designed to help them save now and protect their earnings for future financial goals.

By taking proactive measures with tax filing, deductions, and tax-qualifying strategies one can reduce the amount of taxes owed and gain access to liquid funds more quickly throughout the year. Investing the time and effort into tax planning can help business owners determine which deductions they can qualify for, so they’re not paying more taxes than necessary. This process eradicates tax surprises down the road, allowing one to better allocate resources during moments of increased costs or expenses. Ultimately, tax planning is a comprehensive strategy with much upside when managed appropriately – reduced payment burden and improved liquidity.

Your business will benefit!

As a business owner, tax planning is essential to ensuring that you are only paying what tax you need to. Taking the time to plan tax payments in advance is the best way to minimize your tax outgoings; it ensures that you have identified every available tax reduction and/or tax credit opportunity open to you as well as giving an overview of your tax liability for the coming year. Engaging ahead of time with a tax advisor can help ensure that strategies such as employee stock ownership plans, deductions on property depreciation or tax savings from retirement accounts are all accounted for – thus saving you precious capital. Ultimately, anticipated planning helps alleviate any additional charges due to negligence or late filing which may accrue further penalties and interest.

Understanding the tax implications of your business structure is important to utilizing tax strategies that will best benefit your organization. Whether you’re a sole proprietorship, LLC or corporation will affect the tax benefits and deductions available to you. It is important to be aware of each structure’s tax implications in order to ensure you are taking advantage of every opportunity available. Keeping up on tax changes and understanding how they affect various business structures can help you develop tax strategies that are appropriate for your situation. Utilizing tax credits is one possibility within certain structures but knowing which ones to apply and what other tax-related information needs to be considered should be carefully evaluated for the best results.

Developing successful tax strategies requires research and planning, so including tax advisors in your team may be beneficial to make sure you’re taking advantage of tax savings relevant to your business structure. A financial professional can review and advise on tax strategies suitable for any type of business structure; making sure that your taxes stay legally optimized for maximum savings.

As tax season approaches, it’s time to consider a unique partnership approach and relationship-based consulting model: Rooled. Our strategies ensure that you are well taken care of tax season year after year – we go beyond traditional tax preparation services to build long-term relationships with insight and value. By taking the time to get to know your business, we create practical tax and financial solutions tailored to your unique needs while keeping you informed throughout the entire process. At Rooled, our goal is to work with you year in and year out so that tax season no longer brings anxious anticipation but an assurance of success.


About the Author

Bryce Allen

Bryce Allen is the Director of Tax at Rooled, Inc., in his 16th year of public accounting firm experience. He earned his Bachelor of Science in Accounting at San Jose State University. R&D tax credit guidance is a key area of Bryce's expertise.