If you are a small business owner, your focus is likely on hiring employees, ensuring your daily operations run smoothly, advertising your goods or services, and boosting your bottom line. Notably, tax planning is one key aspect of running a successful company that is commonly overlooked. For small businesses, strategic tax planning can be crucial to ensure profitability, robust cash flow, and continued growth.
Here are five reasons small business owners should prioritize investing in tax planning services:
1. Support the Growth and Expansion of Your Business
A tax professional can help you structure your business in a tax-efficient way that will meet your financial goals and objectives. They can help you choose the right structure for your company and implement advantageous tax strategies — such as deferring income and accelerating expenses. Sometimes you want to accelerate income and defer expenses. As your business grows, a tax advisor can evaluate your current tax planning strategy and make any necessary changes to ensure you won’t later incur a substantial tax burden.
2. Minimize Your Tax Liability and Maximize Your Deductions
One of the top reasons to invest in tax planning services as a business owner is to minimize your tax liability and maximize your deductions and/or credits. A tax professional can advise you regarding the deductions and credits that apply to your business, which you might otherwise be unaware of. Write-offs for things like equipment purchases, startup costs, marketing, travel expenses, and other expenses can significantly reduce your taxable income. Importantly, this tax savings can be reinvested back into the business to support expansion and new opportunities.
3. Reduce Your Risk of Audits
A tax advisor can help you navigate intricate tax laws and ensure you remain compliant with your obligations. Proper tax planning can ensure your records are accurate and your deductions are documented correctly. While many tax audits result from mistakes that are entirely preventable, a tax professional can help you avoid errors — and the potential for audits.
4. Increase Your Cash Flow
Good tax planning can increase your company’s cash flow, ensure your financial stability, and free up funds for growth initiatives. A tax professional can work with you to develop an effective budget that will ensure you have the funds necessary to meet your tax obligations, prevent cash flow issues, and avoid penalties at the time taxes are due. You can be better prepared for quarterly tax payments throughout the year, so there are no surprises.
5. Help You Make Informed Financial Decisions
When you invest in tax planning services, you can gain deeper insight into your company’s financial health. This can allow you to make informed decisions along the way when it comes to investing, expanding your operations, retirement planning, and strategizing for the long term. Significantly, a tax professional can also help you prepare for an eventual exit or succession — and maximize the value you receive upon your departure from the company; an often overlooked part of planning.
Contact an Experienced Tax Professional
If you own a small business, investing in tax planning services can help reduce your tax bill and boost your bottom line. Based in Fairfield, Connecticut, Rolleri & Sheppard CPAs, LLP helps individuals and business owners understand their tax obligations and minimize their liability. Contact us online or call (203) 259-CPAS to schedule a consultation.
