What is it? How do you do it? Why is it needed? Is it expensive?
Tax planning is the art of arranging one's affairs in ways that postpone or avoid taxes. By employing effective tax planning strategies, you can have more money to save and invest. The process is fairly simple. We analyze a small business or individual's income and expenses (including projections), estimate tax liabilities, and then develop a plan to minimize that liability. This is done in two ways - deferring income and accelerating expenses. For example, it might make sense for a company to purchase a new piece of machinery in the current year rather than waiting until next year. This is an example of accelerating an expense.
For individuals, preparing for a tax planning session includes gathering income documents (pay stubs, brokerage statements, etc) as well as estimated deductions (mortgage interest, charitable contributions, capital losses, etc). For a small business, tax planning can be a little more complicated. Every dollar of income and expenses must be accounted for in order to plan with accurate figures. Planning with bad numbers creates a bad plan! So, how does a business owner prepare for a tax planning session? First, data entry/bookkeeping must be up to date. Second, the accounting must be accurate. Third, educated projections must be made for the remainder of the year. Sound overwhelming? Good news! We can help! At Pathways Consulting, we can help you implement a new accounting system, get your current system back on track, or simply help you maintain your system by conducting periodic reviews. We specialize in QuickBooks accounting software and we are Certified ProAdvisors.
Finally, how much does it cost? The cost for tax planning varies greatly and solely depends on the time involved. However, if the result is tax savings for you, then the service has paid for itself! Small businesses with a solid, up to date accounting system in place can usually get a full tax planning session for under $250.
Contact us today to set up an appointment. We want to meet you and find out how we can best serve you this year!
The Pathways Team