Traditional tax planning and strategic tax planning sound very similar; but actually, they are completely separate disciplines with very different results.
Traditional tax planning is a generic term under a large umbrella. It can range from individual advice from a financial planner on IRA accounts to consulting with a CPA on standard tax compliance.
Strategic tax planning, on the other hand, is holistic tax advice given to profitable businesses and owners. It offers proactive, thorough and compliant tax reduction strategies for businesses to enhance tax efficiency. Strategies are put into place throughout the year to reduce taxes, as opposed to after the tax year, when you can’t turn back the clock.
By taking a holistic approach, strategic tax planning takes into account other facets of the business and business ownership − not just tax credits and tax deductions. Included are:
- Corporate structure
- Asset protection
- Executive compensation
- Employee benefits
- Estate planning for owners
- Succession planning for owners
It’s critical to review these different areas holistically because if one facet of the business is impacted by a tax change, it is going to affect other areas.
Strategic Tax Planning is not a standard CPA service.
It requires a professional who is multi-disciplinary. The advisor who undertakes this service must be highly experienced in the areas of law, accounting, estate planning and retirement planning. That’s because, for strategic tax planning to be successful, the effort must be centralized. It’s simply not effective – or cost efficient – to hire multiple professionals to repeatedly examine your business and offer advisement from their perspective.
At Clark Schafer Hackett, we have the expertise and experience to provide this unique service to businesses. A successful strategic tax planning engagement will enable businesses to save more money than the investment in the service.
Further resources for understanding strategic tax planning: