It’s a common misconception that tax planning is only for high-earners, but it’s a crucial element of success for all kinds of businesses. While tax planning is important for any business, it’s crucial for startups and growth-stage businesses. 

The more revenue your business generates, the more it will cost to manage – and the more help you’ll need. With that in mind, tax planning can help you keep your books clean and your business healthy.

Why is Tax Planning Important?

When any company reaches the growth stage, it has an opportunity to plan for the future and make choices now that will allow it to become more streamlined and efficient. Businesses need to examine their operations and structure and revamp their processes to ensure that they are set up for success.

Managing a business at this stage involves minimizing taxes and reducing cash flow risks as much as possible so that resources can be reinvested into the growth of the business.

It's no surprise that tax planning can be highly complex and time-consuming, so the sooner a company starts, the better. It’s a lot easier to pull the pieces together as you’re writing the first draft of your business plan than it is once you’re in the midst of implementation.

What are the Signs that Reveal Your Business is in Dire Need of Tax Planning?

Sign #1: You Need Professional Help if You Always Wait Until the End of the Year to Process Your Taxes

It's not a sign of good business if your books are a mess at the end of the fiscal year and you're frantically trying to figure out how to get everything together.

You should always be aware of what's going on in the books - not just the big picture, but the small details, too. It's part of your job as a business owner to make sure you have a handle on the numbers, even if you have someone else manage them. You should have a good understanding of how and when the numbers are being impacted by your business decisions.

If you're waiting until the last minute to process your taxes, you may be missing out on valuable deductions, which can mean fewer resources to invest and reinvest into your business.

Sign #2: You Need Professional Help if You Don't Maximize Your Deductions and Credits

If you’ve ever gone through the exercise of reorganizing and sorting through your receipts, you know that the process of keeping on top of your deductions and credits can be enough of a headache. It’s easy to get sidetracked or to put off this task, especially since it’s not the most enjoyable thing to do.

If your taxes are not organized and you're not taking advantage of all the deductions and credits you're entitled to, you're missing out on valuable deductions and credits. You might be leaving money on the table, which can affect your cash flow and your bottom line. 

Some of the things you can deduct include your bank fees, depreciation costs of your office equipment, supplies, and even your advertising expenses. On the other hand, you can take advantage of tax credits by doing things like using an alternative fuel source for your business vehicles, or even ensuring your workplace is accessible to people with disabilities. 

Sign #3: You Need Professional Help if You're Struggling to Stay Compliant

Every business owner knows that keeping up with the latest laws and regulations is difficult. Things are changing constantly, so it can be tempting to put off trying to understand or decipher them.

But your business could be at risk if you don't take the time to understand the legal information you need to know. Not only is it important to stay on top of legal changes, it’s also valuable to know how they might impact your business.

You may not be in violation of the law now, but you don’t want to be faced with a fine because you had no idea that you were doing something illegal.

Sign #4: You Need Professional Help if You Want to Improve Your Employee Benefits

Employee benefits are an important part of retaining top talent and keeping your employees happy. You should have an understanding of the cost of each employee benefit, such as health insurance, vacation time, and retirement savings options.

The Bottom Line: The Importance of Tax Planning for Every Kind of Business

Tax planning is an important aspect of starting and running any kind of business – even a small business. If you have employees, you have to keep track of the IRS paperwork and rules surrounding payroll taxes, as well as its associated deductions. It can get confusing, but there’s never a bad time to start planning.

Are You Looking for Accounting Services in Denver?

Tottax is made up of a team of experienced CPAs, tax and business consultants who can help you manage your finances better. From corp tax returns to business tax filing services, we can simplify number crunching and the complexities of taxes for you. Contact us today to find out more!