If you want to minimize your future tax liability, your best bet is to be proactive about it. With proactive tax preparation and planning, you’ll be ahead of the game and will be able to readily pinpoint hidden opportunities that can be used to help reduce federal, state or local tax liabilities.
Tax preparation and tax planning are usually used interchangeably, even though they are different from one another. Tax preparation mainly focuses on the impact of actions that occurred in the year prior. It is the process of gathering, preparing and filing your tax forms. Finding a good accountant to take care of your taxes prior to the busy tax season is key to being proactive with tax preparation. Tax preparation requires a client to meet with an nyc accountant at least once or twice per year. The client then provides all the information that is required to the tax preparer, and the tax preparer takes that information, record it, and tallies up the numbers for the client. At the end of the process, the client will know if they owe money or will receive a refund. The client will also see the exact amount of money they’ll be receiving or owing during the end of the process.
When tax season comes along people stumble upon each other trying to figure out where to go and who to see. It gets a little hectic, but it can be avoided with either having a good accountant readily available before the rush starts or through a more in-depth approach called tax planning.
Tax planning is the most proactive approach you can use. It is a much more forward-thinking and long-term compared to preparation. This method takes a look into the future at upcoming tax returns and can be a little bit more time-consuming. It requires a higher level of communication and engagement between the accountant and client and will require multiple visits. Planning is a continuous process that looks deep into the future in order to uncover effective strategies and opportunities that can influence future tax liabilities. The accountant is able to create a full analysis of the client’s tax situations from the past and can advise them using that information to make their future returns more tax efficient. Strategic tax planning is tied closely to financial success.
Tax preparation gets the filling done, while tax planning helps to find hidden opportunities to catch an issue or to reduce the amount of taxes you would have to pay. When choosing a good tax preparer or planner, it’s good to work with someone you know you could trust and build a long-lasting relationship with. Tax preparation and planning should not be held off and procrastinated on. If you want what’s best for you and your future, or your business future, start looking for a professional who’ll help you to achieve just that. To minimize your future tax liability is the goal, and a good accountant or nyc bookkeeping specialist can be your best bet for saving thousands of dollars.