What is tax planning (and how is it different from tax prep)?
Short Answer: Tax prep files the return. Tax planning reduces the bill before the year ends.
Tax preparation looks backward, it reports what happened. Tax planning looks forward, it helps you make decisions that change the outcome (entity structure, payroll strategy, timing of purchases, retirement contributions, etc.).
Common mistakes:
• Thinking filing an accurate return = optimized taxes
• Starting planning in March/April
• Not tracking profit during the year
What we recommend: Plan quarterly. The earlier you plan, the more options you have.
Still have questions?
If you’re not sure what applies to your situation, we can help.