Tax planning pertains to the process of studying different ways involving tax management to determine how to conduct personal transactions or business to reduce or eradicate tax liability. Tax planning is an ongoing process so seeking a professional advice is crucial to ensure it is done properly, but many small business owners are ignoring this fact. There are actually tax provisions, deductions, and credits existing and governed by the law which is legally acceptable, so you can take advantage of these by discussing these with your CPA or tax advisor whether you are engaged in a small, medium, or large business.
Remember that tax avoidance planning is legally accepted, however tax evasion or reducing tax through deceit, concealment, or subterfuge is not allowed or permitted by the law and this is a major offense. What actually sets tax evasion from tax avoidance is that the IRS find the action or intention fraudulent. The different areas that IRS examiners check when ruling out possible fraud includes accounting irregularities, and improper allocation of income. An example of fraudulent action is failure to report a part of daily business receipts or shareholder’s dividends. A tax evasion case may also be charged if there are overly priced travel expenses as well as large deduction for charity donations without proper documents presented because these are fraudulent in nature. If there are accounting irregularities such as failure of a business to keep sufficient records or any discrepancies in the tax return and financial statements, these can also warrant fraudulent transactions or tax evasion. Allocating income to a related taxpayer in a lower income bracket where a company makes distributions to the controlling children of the shareholder is also fraudulent.
By seeking the help of a tax planning professional, you will be helped to find the best tax planning strategy for you in a legal and acceptable way. The different tax planning goals that a professional can help you with include reduction of taxable income, tax rate reduction, control time tax payments, claim of available credits, control effects of Alternative Minimum Tax, and avoid the most common mistakes of tax planning. Proper planning is important when estimating your business and personal income for the next few years. We are the best tax planning professional you can count on in Foxborough. It is essential to hire a tax planning professional in Foxborough with a good reputation, foolproof credentials, and with good communication skills so business owners can fully benefit from the service. We are committed and dedicated to offering the best tax planning services to any type of business in Foxborough.