Corporate tax planning refers to the strategic structuring of business operations in order to minimize the amount of taxes paid in a given period. Corporate tax planning activities generally seek to avoid legally triggering tax costs rather than illegally evading an existing obligation to pay taxes. Tax planning represent a forward-looking activity, as opposed to tax compliance or reporting, which reflects back on events that have already taken place. In sum, tax planning is simply the logical analysis of a financial situation or a plan from a tax perspective, to align financial goals with tax efficiency planning. Its purpose is to find out how to accomplish all of the other essentials of a financial plan in the most tax-efficient manner possible.
Effective tax planning involves analyzing investment instruments, expenditures, and other factors such as filing status for their tax liability impact. Accounting, finance, banking, and insurance firms all emphasize slightly different aspects of tax planning in accordance with the types of services they provide and the laws governing their industries.
There are quite a few areas of tax planning that apply to all kind of businesses. These areas include the choice of accounting and inventory-valuation methods, the timing of equipment purchases, the spreading of business income among family members, and the selection of tax-favored benefit plans and investments. In addition, there are a few areas of tax planning that are specific to certain business forms such as, sole proprietorships, partnerships, C corporations, and S corporations.
Corporations typically engage charter/certified accountants or tax attorneys for technical advice in this complicated area. H&P Accountants have the perfect expertise that can deliver advice on planning, compliance and reporting to your company.
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