Any American with a pulse knows that individuals and businesses pay a plethora of taxes. But it wasn't always that way. Even though taxes have been around since before the inauguration of the United States, they used to be much simpler.
Plus, there wasn't always a federal tax deadline. Crazy, right?!
If you’re putting off planning for your 2018 tax return, you’re running out of time.
The opening of each new tax season starts toward the end of January. Last year’s tax season began on January 29th, and while we’re still waiting to hear on this year’s timeline, it’s never too early to start planning.
Of course, most businesses leave their tax filing to their in-house accountants or outsourced CPAs, but whether you’re having a professional do it, or you’re taking the DIY approach, it’s good to get a jump start on the process.
Just like there’s a really, really big difference between tax avoidance (lessening tax liability and legal) and tax evasion (the deliberate under- or nonpayment of taxes and criminal), there’s a big distinction between tax planning and tax filing. Unfortunately, if you’re like most people, it’s a distinction you’re not all that familiar with.
The short version goes something like this:
Tax filing is when you prepare and submit your tax return to the IRS by a determined deadline.
Tax planning is working with a financial professional to make sure you use the tax code to your greatest advantage.
Though the deadline for filing your taxes may be months away, most small business experts agree: the two best times to get a jump on tax planning are “now” and “all the time.”
We know that isn’t always easy for an overworked, enterprising small business owner, but it’s crucial to your company’s growth and success to make tax planning and strategizing a year-round effort.
Tax planning is, by definition, an assessment of your financial situation from a tax perspective for the purposes of reducing how much money you owe the government. Legally, of course. The goal is to take stock of the money you’ve made, and choose which financial choices will promote the most favorable tax treatment. You do this through proper planning, which includes strategizing, timing, leveraging tax advantageous vehicles (i.e., retirement plans), and more.
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