Tax planning pertains to the process of studying different ways involving tax management to determine how to conduct personal transactions or business to reduce or eradicate tax liability. Many small businesses ignore tax planning but this is an ongoing process and getting a good tax advice is very important. There are actually tax provisions, deductions, and credits existing and governed by the law which is legally acceptable, so you can take advantage of these by discussing these with your CPA or tax advisor whether you are engaged in a small, medium, or large business.
Keep in mind that although there are ways to reduce or eliminate your taxes, performing tax actions with deceit, concealment, or subterfuge is illegal, but tax avoidance planning is completely legal. What actually sets tax evasion from tax avoidance is that the IRS find the action or intention fraudulent. When it comes to IRS assessments, IRS examiners will check any possible fraud in four areas including failing to report substantial amounts of income, accounting irregularities, claims for improper or fictitious deductions on a return, and improper allocation of income. An example of fraudulent action is failure to report a part of daily business receipts or shareholder’s dividends. A tax evasion case may also be charged if there are overly priced travel expenses as well as large deduction for charity donations without proper documents presented because these are fraudulent in nature. If there are accounting irregularities such as failure of a business to keep sufficient records or any discrepancies in the tax return and financial statements, these can also warrant fraudulent transactions or tax evasion. Improper allocation of income include controlling tax distributions for lower tax bracket such as shareholder’s children.
By seeking the help of a tax planning professional, you will be helped to find the best tax planning strategy for you in a legal and acceptable way. The different tax planning goals that a professional can help you with include reduction of taxable income, tax rate reduction, control time tax payments, claim of available credits, control effects of Alternative Minimum Tax, and avoid the most common mistakes of tax planning. Proper planning is important when estimating your business and personal income for the next few years. We provide accounting services and tax planning services to our clients in Foxborough. A good tax planning professional or agency provides excellent services, with a good reputation, foolproof credentials, good communication skills, and reasonably priced services. We are committed and dedicated to offering the best tax planning services to any type of business in Foxborough.