Paying taxes can be bothersome; however, it is a responsibility every working citizen must shoulder. While some people complain about the amount of money they have to pay to the government, others have completely acquainted themselves with the law and used it in order to gain advantage and lessen their taxes. If you want to know how to lessen your taxes, you need to know how to plan your tax payments first. Here are a few tips on how to do proper tax planning.
Know Your Tax Laws
The first thing that you should do is know your updated tax laws. If you feel that you won’t be able to monitor these laws, you may want to acquire the services of an accountant or tax specialist to do it for you. This tip is especially useful for people who own a business.
Use Good Accounting Software
If you own a business, automating all your tax information will make it easier for you to monitor your company’s taxes. From there, you can work together with your accountant on determining which ones may be deducted. Quickbooks is a good cloud-based software that you may use.
Choose To Defer or Accelerate Revenues
There are two strategies that you can use when legally planning a way to pay less tax for the year. I’ll run through how these two methods work.
In all countries, businesses (or individuals) will have to pay tax based on their tax bracket. For companies, it would depend on how much net income they incur in a year. If you know you will be in the same tax bracket as last year, you can accelerate your expenses to defer your income so that you won’t have to pay much for this year. If you think your business will reach a higher tax bracket next year, then defer your expenses for next year and accelerate your income this year.
Do Charity Work
One of the common practices of big-time businessmen is doing an annual charity program. Why? Well, other than the fact that it helps the community, it also helps with their taxes. Charity expenses are not taxed. Moreover, they help in extending your businesses’ public relations.
Seek Tax and Legal Services
Even though an accountant may monitor the taxes and record them properly, there is no other person who can really give a business owner advice the same way a tax and legal specialist can. Also if you have a high net worth family, requiring the help of estate attorneys can be a necessity to protect and have control over your assets, while taking the benefits from them. If your assets could benefit from advanced tax planning and want to reduce your heir’s taxes, you may want to get in contact with the attorneys from this site or other such websites of legal firms that can guide you through this process. There are many firms all over the world who offer good tax and legal services on a multinational level.
Additionally, these are some tips that you can use in order to lower your taxes for the year. Funny enough, proper tax planning is usually diligently practiced in countries with low corporate tax rates. Let’s take Cyprus, for example. Tax planning in Cyprus is a trend even though Cyprus has one of the lowest corporate taxes in the world. Companies in the country have very low taxes because other than their low tax rate, they also know how to do tax planning properly. Tax planning can be a big help to your company if you do it properly.