3 T’s of Tax Planning
Does the phrase tax planning send a shiver down your spine? You’re not alone, anxiety about taxes is one of the biggest complaints we hear from clients who visit our office. In many cases, their fear is warranted because they have not engaged a tax planning professional and their taxes are either a mess, or they’re paying much more than they need to. We understand it’s no fun to face tax planning on your own, but you don’t have to.
1. Engage the Right Team
The first, and possibly the most important T is team. Who you hire to develop and execute your tax plan matters. It’s critically important to have a talented tax expert on your team. And, if that person can also provide you with sage business advice you’re well on the road to success. For the record, not all accountants and certainly not all bookkeepers are tax experts. If you want to ensure that your taxes are done properly to save you the most money make sure you do your research to find a partner who can support your success.
2. Timing is Key
The purpose of tax planning is to analyze your finances from the perspective of how your income and spending in a particular year will impact your taxes. By planning ahead you can develop a strategy to reduce your tax liability and invest in things like retirement. All of this planning takes time. Tax planning is not something that you can do at the last minute, and that’s why the second of our 3 T’s is timing. In order to get the most out of your tax planning process, you should meet with your accountant early and regularly. We recommend that our clients begin considering a meeting with us no later than September. This gives us the fourth quarter to implement a personalized tax strategy.
3. Execute Successful Tactics
Succeeding in the first two of these categories, team, and timing will enable you to be successful with the third category: tactics. A great team that has plenty of time will be able to help you develop the best tax planning strategy. Some of the considerations of an excellent tax plan are retirement contributions and tax-loss harvesting. The tactics you employ through your tax plan really matter, and it takes an experienced expert to help develop a plan that will grow your wealth and decrease your risk.
As this summer continues to inch forward it will be easy for you to think that tax planning is too far away to worry about. However, the ideal time (early fall) to begin this conversation with your accountant is just months away. So call today to put a meeting on the books so that you can end 2020 in the best tax position possible. If you need a tax expert to partner with, contact us today.