I get it, everyone hates talking or thinking about taxes. However, avoiding the word tax only makes the situation worse. We hear stories from business owners all the time where they are simply paying too much in tax or are surprised with a big tax bill at year-end.
In our Free Facebook Group a member actually just posted about this so here we go.
How Do I Avoid A Big Tax Bill?
Plan, Plan, Plan
- #1 Mistake Business Owners Make: Failing to Tax Plan
- When thinking about tax, most business owners think about tax filing in March and April.
- However, that is the LAST step in the process.
- Tax planning should occur way before the year is even over.
- What Is Tax Planning?
- The act of doing research and implementing strategies to ensure you are paying the least amount in taxes as legally possible.
- Check out Baseline Tax Strategies vs Advanced Tax Strategies for more information on type of tax planning strategies.
- Most tax planning needs to be implemented BEFORE year-end.
- We recommend sitting down in June to do tax planning. Why June? You have a half of years worth of data to see how your business is performing this year and you have a half of year left to implement those strategies.
- Simply Put: If you are not doing any tax planning you are paying more in taxes than you should be.
- My Goal: When you hear taxes you think of tax planning FIRST and tax preparation and filing AFTER that.
- If you already got hit with a big tax bill, I understand it, that sucks. However, use that as your motivation to make a change NOW to avoid that in the future.
How Do I Avoid A Tax Surprise?
Estimates, Estimates, Estimate
- Tax surprises are never fun, avoiding them involves multiple parts.
- #1 – Accurate and Up To Date Bookkeeping: You need to have accurate and up to date bookkeeping so that you know how your business is performing at any point throughout the year. As part of our Tax Minimization Program we have an entire set of modules specifically on how to do bookkeeping on your own. Do NOT neglect this part of your business.
- #2 – Tax Planning: We discussed this part above.
- #3 – Estimated Tax Calculation: Once you have a good idea on all of your income (this includes business and non-business activity) you can do tax estimates. This entails taking the information/expected income and estimating what your tax bill will be so that you can properly plan and pay those estimated taxes as necessary.
- #2 and #3 above often times play together. You may be estimating a large tax bill and thinking, how can I reduce that and that is when you will dive into additional tax planning strategies.
That is it! It all stems around planning. Make this be the year that you pay the least amount in taxes as legally possible and avoid any tax surprises.
For more details on this along with additional training and tax strategies to ensure you are paying the least amount in taxes as legally possible, check out our Tax Minimization Program!
If you don’t have an accounting or tax advisor (or you need assistance with anything discussed), click here to book your complimentary strategy session with JETRO.