Tax planning is a strategic approach to managing your business’ financial affairs, with the aim of legally minimising your tax liability. In other words, you plan ahead to make sure you pay the taxes you should be paying, but not a penny more.
Working with your tax adviser, you can look for deductions, credits, exemptions and tax-saving strategies that will help to optimise your company’s overall tax position.
How Does Tax Planning Affect Your Business?
The primary goal of tax planning is to reduce the amount of taxes your business owes. But it’s also about making sure you stay compliant with all the tax laws and regulations applicable to your business.
But what are the main advantages? Let’s take a look at five of the big benefits of careful, strategic tax planning.
By planning your tax across the year, you can:
Maximise Your Profits
Strategic tax planning helps your company find the best available tax incentives, deductions, and credits. This reduces your overall tax liability, cuts your annual tax costs, and increases your overall profitability as a business.
Boost Your Cashflow
Tax planning is a great way to open up more liquid cash and achieve a better cashflow position for the business. When you cut down the company’s tax payments, that frees up cash and helps you achieve a positive cashflow position.