It is important to undertake tax planning at the beginning of the financial year. This gives you enough time to review any saving options for the whole year. Delaying the process can cost you money in the long-run.
Personal Tax Planning
Tax planning involves the analysis of a financial situation and what you need to pay. The main aim of developing a plan is to ensure efficiency and to reduce your liability. Some of the considerations of the planning process include planning of expenditures, timing of income, timing of purchases and the size of income. Planning strategies include saving for retirement or engagement in gain-loss harvesting.
Business Tax Planning
For effective business taxation planning, a check list of business costs is required. This includes a list of business income which is usually dependent on the legal formation of the business and the state and local income taxes of the business which depends on the location of the business. Also depending on the type of business and its location, you require business permits and licenses which ensure that the business is legally operational to avoid legal interferences. The total business income is also considered fo self-employment taxes which are predetermined.
A Business can be a tax saving device
Every business needs a personal accountant who can help in organising the businesses’ records in order to minimise the amount they wil need to pay to HRC. Poor records could also lead a business to being denied deductions if the business gets audited.
Monitoring changes in laws
Changes in the taxation laws can affects business planning. New laws may include a lower flat corporate income tax rate where these lower rates are offset by the elimination of personal exemptions and higher standards of deductions. Small businesses get a higher benefit since they are not corporations and will be given a 20 percent cut on their business net income in addition to typical business deductions.
How We Can Help
A qualified chartered accountant should be given the responsibility of taking care of all taxation related expenses. Possible sources of taxable sources includes income from self-employment, taxable refunds, tax gains, and compensation from unemployment. As at 2019, some adjustments to income include contribution to health savings accounts, business expenses paid by certain government officials and performing artists, student loan interests, a portion of the self-employed as well as self-employed health insurance.
To reduce the personal amount payable, you need to avoid at all costs additional taxes by avoiding early withdrawals, increasing the amount of deductibles where you can either claim the standard deductions for filing status or itemising your qualifying deductions or have both. You can also take advantage of tax credits which not only reduce the taxable incomes but are also subtracted directly from any debt owed to HMRC after taking all the adjustments to income and deductions you are entitled to. Some credits include savings for retirement, college expenses and childcare expenses.
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