Business Owners

Quick Tax Planning Tips for Small Business Owners

BY Leslie Thompson | CFA®, CPA, CDFA™, Chief Investment Officer, Co-Founder | Sep 1, 2021

As a small business owner, you spend a lot of time reviewing your business’s finances, but do you take the time to consider how financial planning strategies could help your company be more successful?  Taking charge of your business’s tax strategy is a vital part of annual financial planning.

To keep it simple, tax planning is a long-term, strategic approach to minimizing your tax liability every year.  It puts you in command of your company’s finances and effective monthly planning can allow you to evaluate your business, make sound decisions, and adjust things when necessary. 

Here are some tips to help you get started with the tax planning process.

1. Get Organized

As with most financial situations in life, the key to success is making sure you are organized and prepared.  It is easy to throw away receipts or not keep track of your smaller expenses when it comes to business expenses.  Be sure to keep receipts from all purchases, regardless of the cost.  A tax-planning professional will ask you for detailed information, including records of all of your accounts, receipts, invoices, etc. As with anything tax-related, the more records you have, the better.

2. Establish Your Business Goals

Any business can benefit from establishing and outlining clear financial goals.  Where do you want your business to be in five years?  How much do you think you should have as a financial “cushion” if the economy were to struggle in the coming years? Deciding on goals such as how much money to set aside for saving, investing, or purchasing items that will help the company long-term is a key step toward financial freedom and growth.

3. Work With A Tax-Planning Professional

Tax laws and programs are constantly changing.  Having a tax planning professional on your team can help you stay ahead of changes and avoid potential pitfalls. They spend time extensively researching tax forms that apply to the current tax year and what changes have occurred. If you don’t work with a tax-planning professional, you could run the risk of omitting a form that didn’t exist before. 

Having a well-thought-out tax strategy enables you to implement an effective tax plan that suits your business’s unique needs, saving time and reducing stress during tax season and throughout the fiscal year.

Need direction on how to create a plan to achieve your company’s financial goals?  Contact us to connect with one of our expert advisors and learn more about how we can help simplify your finances and live life by design.

This content is developed from sources believed to be providing accurate information, and provided by Spectrum Management Group. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.