It may feel like you just submitted your 2021 return, but if you haven’t already thought about what you need to do to mitigate your tax liability for 2022, the time is now.
Think of it this way – you’ll need to deal with it sooner or later, and tax planning is a little like limburger cheese – it just gets smellier over time.
When you’re running a business, it’s the tyranny of the urgent that demands your attention on a daily basis. No employee ever called their boss in a panic and said, “My hair’s on fire. I just noticed we haven’t done a comprehensive financial analysis to project our tax liability and ways to reduce it.” And, honestly, that’s fair. Of course you’re busy taking care of the many daily demands that make up running a business, and tax planning is rarely at the top of that list this time of year.
Generally speaking, “tax planning” involves an overall financial review to ensure you are taking advantage of every opportunity to maximize your tax savings. A comprehensive review should include such areas as financial projections, cash flow, planning key purchases, expense planning, credit opportunities, and your current tax strategies.
So, if you haven’t finalized your books with your bookkeeper and sent your financials to your CPA for review, there are some excellent reasons you do want to make tax planning a priority as 2022 draws to a close. One of the most compelling reasons is putting more money where it belongs – invested in the business. You don’t want to get to tax season next year only to find that if you had done “x” just a few months ago, you could have substantially saved on the taxes you owed.
Early tax planning means a more effective use of your time and resources, a smoother running business, and more money to run and build your business. Just imagine facing tax season knowing you are prepared and have taken all the steps you can to reduce your liability. It’s hard to put a price on that kind of peace of mind.
At LifeLine, we believe in helping our clients with their overall financial and tax strategies, so if you’re a LifeLine client, reviewing your financials for tax implications is part of our service. If you manage your own books, or your accounting support doesn’t include tax planning, you’ll want to look at your numbers now to avoid a surprise at tax time. As your comprehensive bookkeeping and accounting service, we’re here to help. Contact us to talk about what you need to do to get your books in order and prepare now for tax season next year.