How Tax Planning Can Save Business Owners Money

Understanding Changes to Tax Laws 

Tax laws change frequently, and while many of these changes are small and may only have a minor effect on your return, others are much larger and can have a much more significant impact. The Tax Cuts and Jobs Act enacted this year made sweeping changes to tax law, many of which will have a large impact on business owners. It’s important that you speak with a CPA before the end of the year, so that you can understand how these new laws may impact your business. 

Understanding these changes can give you guidance and insight on the financial decisions you make before the end of the year, and throughout the following year, especially in regards to deductible expenses for your business. Because tax law touches every part of your business’s financials, it’s vital that you take the time to understand the changing laws—before you make major financial decisions. 

Decisions Regarding Large Purchases 

One important facet of financial planning for businesses is deciding when to make large purchases, such as for business vehicles and new equipment. Many business owners make these decisions without considering the tax implications of such purchases. But proper business tax planning can help you to time these large purchases to offer the largest tax benefit for your business. 

Additionally, because the purchase of equipment or a business vehicle is a deductible business expense, your business tax planner can help you to calculate the true cost of such an expense. For example, if you’re considering purchasing a new piece of equipment that costs $10,000, it’s important to remember that this is only the upfront cost. Because this expense will be deducted on your tax return, the true cost for your business will be significantly less; if you’re taxed at 30%, for example, the net cost of the equipment will actually be $7,000. Your tax planner can provide you with this kind of information and these types of calculations to help you determine the right time to make such purchases for your business. 

Guidance in Retirement Contributions 

But a tax planner won’t just help you examine your business’s deductible expenses. They’ll look at your business’s income as a factor for your personal return as well, and help you to make personal financial decisions based on your business income. Our CPAs can review your income and expenses, and help you decide if it’s beneficial to make additional contributions to your retirement accounts, or even to charities, in order to maximize your deductions and reduce your tax bill in the coming tax season. 

A professional tax planner will examine your business and personal finances side by side, and will help you to get a better overall picture of what you can expect in the coming tax season. Filing taxes is no walk in the park for any business owner. But with proper business tax planning as a part of your annual financial plan for your company, you can make smarter financial decisions that will benefit your business and personal finances alike. Contact us to learn more about our business tax planning services in Provo and schedule an appointment.

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