Have you ever felt anxious going in to review your tax return? Have you ever been uncertain whether you were going to receive a refund or owe money to the IRS?
Too often, tax season brings unpleasant surprises like balances due and penalties. However, at K&R we believe that surprises at tax time are not only unpleasant but also unnecessary. By the time you reach the tax preparation stage, it is too late to implement many of the strategies that can save you money. When planning for taxes happens throughout the year, strategies for tax deferral and tax avoidance can be put into action.
Tax planning is especially effective for self-employed individuals or small business owners. Unlike W-2 employees, business owners have a much larger array of options for finding credits and deductions that make sense for the way you are already doing business. A tax advisor can help you strategically time expenditures that you already make like donations to charity or large purchases of equipment.
For many business owners, the last time that they evaluated the structure of their business was when it was formed. However, owners of LLCs have the flexibility to tell the IRS how they want to be taxed. Often, the default method is not the most beneficial for the taxpayer, especially as their income grows. For example, electing to be taxed as an s-corp can save business owners up to 15.3% in taxes annually, but the decision of if and when to make this election is different for every business. K&R performs analyses that consider projected income, profit margins, and other performance indicators to determine the most tax-efficient structure of your business.
Tax planning goes hand-in-hand with financial planning. The right professional services firm will consider both your short-term and long-term goals. Saving for retirement is a priority for almost everyone, but decisions such as investing in a traditional versus a ROTH retirement account can be overwhelming. Determining the most tax efficient option depends upon a variety of factors including your marginal tax bracket and the projected growth of your income. K&R employs an in-house financial advisor to ensure that your tax and financial planning are working in tandem.
As each new administration takes office in Washington, promises to improve federal tax law contribute to increasingly confusing rules and regulations. Most business owners do not have the time to devote to researching and implementing new tax strategies while also growing their businesses. The right financial services firm remains in front of these shifting opportunities. At K&R, we proactively reach out to clients that we think will be eligible for credits such as the Arizona Corporate Credit for school tuition organizations and the federal Employee Retention Credit.
EXPECT MORE than tax preparation from your accounting firm. Effective tax strategy must be timely and integrated with your financial goals. Your tax advisor should be as knowledgeable about tax strategy as they are about compliance.
Do you think K&R is the right advisor to help you save money on taxes? Call our office today at 480-392-6801 to set up your tax planning meeting.