There are many tax planning strategies for small business owners aimed at their individual tax situation and business itself. Regardless of the complexity of the tax situation, one of the following goals will be accomplished:
- Reducing the amount of taxable income
- Lowering your tax rate
- Controlling the time when the tax must be paid
- Claiming any available tax credits
- Avoiding the most common tax planning mistakes
It will be necessary to estimate your personal and business income for the next few years because what will save tax dollars one year could possibly create a larger bill another year due to higher income levels. These estimates are rarely exact but you should begin projecting revenue, income and cash flow…the better the estimates the better your tax planning strategy will be.