Have you ever met with a tax advisor and been told you could have done something about a tax problem if only you had acted sooner? When most people think about tax planning, they usually think:
It's something you do when you have your tax return prepared. It's something you do at the end of the year. While both of these times have a place in a tax strategy, oftentimes it is simply too late or there is not enough time to get the best results. You can also get the best tax planning service through various online sources.
Year Round Tax Planning
Year round tax planning does not mean you spend the entire year working on your taxes. In fact, year round tax planning can be done in very little time and still have a big impact when it comes to reducing your taxes.
If you are developing your year round tax planning strategy, here are 3 areas to focus on:
Entities are one of the most effective ways to reduce your taxes – when used correctly. When used incorrectly, entities can increase your taxes.
Here are a couple of questions to ask yourself about your entities.
Do you need to change how your entity or entities are taxed?
Sometimes an entity is formed with the strategy that once that entity hits a certain level of income, then how that entity is taxed needs to change.
This can be a very costly tax mistake if it is missed. Do you need to add an entity or restructure how your entities are owned?
Knowing the right time and the right entity for your tax strategy can save as much as $10,000 per year in taxes.
Regularly reviewing the entities in your tax strategy helps ensure each entity is providing maximum tax benefits.