Why Now Is the Best Time To Start Tax Planning

Most business owners know that tax planning is a year-round activity. Nevertheless, too many cost themselves money by putting off most of their strategizing until the last minute. If you're one of those people, right now is the wiser time to start thinking about your 2023 taxes.

There are multiple reasons why. For example, some tax strategies will benefit you more if you have a full year of saving rather than starting in the middle of the year. Even better, you can take advantage of tax deductions and credits before they expire for 2022 as well. There's still time to reduce your taxable income —if we start soon.

Let’s examine the following today:

• The tax code is ever-changing
• Planning ahead can help you save money
• There are multiple ways to reduce taxable income
• Tax planning should be done throughout the year
  

The Tax Code Is Ever-Changing

As a small business owner or entrepreneur, you are probably aware of how complex and ever-changing the U.S. tax code can be. Keeping up with all the changes can be daunting. Meanwhile, it's easy to miss out on important deductions and credits that could save you money, week by week unless you plan to, proactively.

Since Ironclad Wealth Management began as a small business, we know the desire to do as much as possible for yourself. I say that with respect, but you need to know: This is not a good time for D-I-Y approaches to tax planning (unless you’re a CPA). The IRS openly admits deliberately targeting successful people for audits. Unless you just enjoy poking grizzlies with a stick, I wouldn’t risk a mistake(s).

Fortunately, filing your small business taxes doesn't have to be stressful. There are professionals who specialize in helping you navigate the tax-code maze. With a little preparation, you can rest easy knowing that everything is handled correctly.

Planning Ahead Can Help You Save Money

Proactive tax planning is essential to keeping your costs down and avoiding costly penalties. By preparing well in advance; strategizing your deductions and credits, we can maximize opportunities for saving you money throughout the year.

Proactive planning also allows small business owners to budget more accurately ahead of time. This helps to ensure that you have enough set aside to pay 100% of your taxes when the due date comes.

Additionally, by preparing early, you can significantly reduce the likelihood of mistakes (and costly penalties) down the line. Why start 2023 dreading April (and a possible audit)? Instead, get proactive and put a long-term plan together. You could save money and avoid unnecessary fines due to filing errors or omissions.

Think You Can’t Afford Professional Business Financial Advising? You Might Be Surprised.

There are Multiple Ways To Reduce Taxable Income

While there are many strategies to consider, some of the easiest and most reliable ways to reduce taxable income include claiming deductions, such as mortgage interest, charitable giving, and tuition fees. Participating in a retirement plan like an IRA or 401(k) or contributing to a Health Savings Account (HSA) can help, as well.

These are only the tip of the iceberg. There are also tax credits worth considering, like the Child Tax Credit, but you can potentially write off business expenses related to your business day activities, such as travel or supplies, too. Additionally, an entrepreneur may benefit from incorporating your business for additional deductions. Investing money in SEP IRAs or Defined Benefit Plans can help, as well.

When pursued responsibly and knowledgeably with help from an experienced professional, tax optimization can provide both short-term benefits and potential long-term savings opportunities. Finding an effective balance between adhering to strict regulations and exploring opportunities can lead to greater long-term success.

Tax Planning Should Be Done Throughout the Year

Good tax planning should be a year-round effort, not just something we put off until the end of the year. The reason why is that small business owners have immediate access to a variety of tax advantages and deductions all year long. These can make a big difference when it comes to reducing your liability (or the amount of taxes you owe).

An experienced financial advisor can help you determine which expenses your business is eligible for and then devise an effective plan for taking advantage of them. Generally speaking, small business owners should use estimated taxes instead of waiting to pay until the end of the year.

This approach can often reduce any penalties applied due to large lump-sum payments. Additionally, setting aside time each quarter to review income taxes enables you to make necessary adjustments based on current conditions. That, in turn, allows us to optimize your deductions and credits better, typically saving time and money.

The Sum Total

Tax planning should always involve careful consideration of your past returns, current tax regulations, and future financial goals. At the same time, it should factor in the possible benefits of various timing-related strategies. Tactics like analyzing your expenses, reviewing appropriate credits, and taking advantage of small business deductions while keeping updated with tax policy changes are also beneficial.

By developing a thorough understanding of the basic techniques for reducing taxable income in a compliant way, you can better stay ahead of the curve all through tax season. Helping you learn these things is just one of many ways in which a fiduciary financial advisor may be able to benefit you.

Ideally, Ironclad Wealth Management isn’t just here for you when tax time looms. We want to become a dependable asset to you and your business now and for years to come. That’s not just because your greatest potential savings come from a long-term approach to your income taxes (though that doesn’t hurt), either.

Planning ahead doesn’t just prevent costly errors. It often reduces possible financial stress over ugly surprises while tax filing day keeps getting nearer. In fact, future years could possibly get brighter—for you, your employees, and your business—with long-term tax savings.

Working with a professional wealth manager can help ensure that you're taking advantage of all your available tax breaks. However, the sooner you start, the better things are likely to go. Ironclad Wealth Management specializes in tax planning for small business owners and wealth management in Atlanta. Contact us to learn more.

If Patrick Can't Save Your Business $5,000 in Taxes, You Get Your Money Back.

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