Can tax planning really help you save money?
We hear this question often from business owners, independent contractors and other self-employed people. It makes sense that effective planning can help you achieve your goals but, when it comes to paying taxes, most people assume that they owe what they owe, no matter how much they might wish otherwise.
But the truth is that effective tax planning can help you save money – potentially a lot of money – especially if you are self-employed.
Tax Planning Prevents Overpayment
Many employees wait all year long for their tax refund check to arrive. They use this (expected) windfall to splurge on a new TV, take a vacation or pay down their credit cards. But this is simply bad business because it means they lent their money to Uncle Sam, interest-free, for an entire year.
Self-employed people have to follow a slightly different set of rules than employees, but even they aren’t immune to this ill-advised mindset.
Planning helps you follow the most important strategy of all: never pay more taxes than you legitimately owe and never pay your taxes before you absolutely have to.
Tax Planning Maximizes Deductions
Approximately 85% of self-employed people and business owners overpay their taxes. This typically occurs because they do not take all the deductions to which they are entitled.
You may also be able to increase your deductions by restructuring your financial portfolio, your legal entity structure, investments, etc. When you work with an experienced tax planner, you will learn a myriad of ways to align your goals for the future with the tax code, to help you achieve your objectives while legally reducing your tax liability as much as possible.
Tax Planning Helps You Avoid Surprises
The federal tax code changes almost constantly. Sometimes these changes have a positive effect on your liability but, in other cases, they may increase the amount you potentially owe.
When you use the services of a CPA and tax planning expert, you can rest assured you’ll stay up-to-date with any and all changes that may affect how much you owe. This gives you a chance to make the necessary adjustments to minimize your risk and helps prevent those nasty surprises that can leave you having to write a big check.
When Is the Best Time to Start Tax Planning?
The short answer is, as soon as possible.
Even though the year is nearly half gone, you still have plenty of time to reduce your tax bill for the current year, as well as in the future. In Utah, the experienced Taxes Mastered team is standing by to help you avoid overpaying your taxes or committing any errors that could trigger unwanted attention from the taxation authorities.
Contact us today to for a free assessment, to see if you’re paying to much in taxes. If you are, call to schedule your Utah tax planning appointment.