Short-Term and Long-Term Tax Planning – No More Clickbait PleaseApr 12, 2022
At CPA On Fire, we are on the forefront of tax strategies for entrepreneurs. Our accountants have been doing tax planning and strategies for over 25 years, so we are well versed in what it takes to successfully reduce an entrepreneur’s taxes. There is an unbelievable amount of clickbait out there promising impossible things such as getting your taxes down to $0 and cutting your tax liability to nothing. There are a lot of good tax deductions for business owners who are doing well, but they are not going to bring your tax liability to zero. What it ultimately comes down to is short-term and long-term tax planning.
In the short-term, you might not be saving a million dollars on your taxes this year. But long term, 5-10 years down the road, it is certainly possible to save a million dollars through having the proper tax planning strategy. That sort of long-term savings requires regular reevaluation, regular course correction, and regular meetings with a tax professional.
If you have a business doing under $500K in revenue, you need to have a qualified tax professional in your corner that is willing to meet with you DURING the year to go over a specialized tax strategy for you. Once tax season rolls around and you go to file your taxes, there is very little that can be done to save you more money. Aim for some time early in Q4 to sit down and determine the best plan for the remainder of the year. This gives you time to still take advantage of certain tax planning strategies for that specific year. On top of that, your tax professional should be helping you with a long-term tax strategy for the next 5-10 years.
If your business is doing over $500K in revenue, then we suggest you work with a tax professional every quarter throughout the year at a minimum. Revisit your tax strategy and make course corrections as necessary to stay on the right track to get the most out of your tax savings.
Another big piece in tax planning is retirement. Some entrepreneurs don’t want to do anything with retirement and want to reinvest everything back into their business, whereas other want to maximize their retirement deferral. We work with both sides of the spectrum, and either decision comes with the need for a solid tax planning strategy.
Other important aspects of planning and strategy include home office expenses deductions and vehicle deductions. Understanding and maximizing these deductions can be very beneficial for an entrepreneur, but they need done properly.