Could you and your business be more strategic in pursuit of tax efficiency?
While business owners strive to be strategic in every aspect of operations, the reality is they rarely have the hours for it. You are not alone if you find yourself more reactive than proactive, particularly when it comes to tax positioning. But if your business is a profitable one, your tax bill can be one of the largest expenses you pay throughout the year.
Improve your after-tax income and your business ROI
Strategic tax planning entails a wholistic look at your business picture, not only to ensure usage of all available tax credits, but to evaluate your entity structure, executive compensation, employee benefits, your succession plan, your estate plan, and many other factors. By examining each of these areas, determining how tax can be reduced in each area, and analyzing how changes in one area will affect another, you can reduce your overall tax exposure currently, while positioning yourself for tax-minimized transactions in the future.
This type of planning, however, is not a one-time fix; it requires constant monitoring and adjusting to ensure usage of the most recent updates to the tax code. We’ve seen businesses qualify for tax credits they’ve traditionally disregarded, because they didn’t realize changes in the code made them newly eligible for the incentives.
And of course changes in your business will impact your strategic tax plan, requiring additional decisions or action. These would include transitions in business ownership or employee makeup, mergers and acquisitions, and the death or divorce of an owner. Businesses that monitor these changes will ensure that a minimum amount of tax is paid year-in and year-out.
Advisement may be needed
Comprehensive strategic tax planning requires time and specialized knowledge of the tax code. But businesses who invest in this will not only increase their after-tax income, they will position themselves for competitive advantage in the future.
Further resources for understanding strategic tax planning:
- How is strategic tax planning different from traditional tax planning?
- What is the strategic tax planning process?
- Strategic tax planning: Two companies’ success stories
- See how all 10 profit boosting ideas can work at your company
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