Although all business owners want to minimize the tax that they pay, not everyone can - or wants to - spend the time and energy to invest in researching and structuring their business affairs to optimize their tax obligations.
We have learned from our experience with clients that developing a thorough approach to tax planning is the most effective starting point. That means focusing on the following key elements:
Developing a tax strategy – Since each business, shareholder, family, and entrepreneur is unique, we must develop an equally unique planning strategy based on specific business and ownership objectives
- Implementing the appropriate administration – Developing a plan and tactics is only one step in a tax optimization strategy; you need the proper administration and systems in place to support, operate, track, document and follow through
- Monitor and adjust – No plan lasts a lifetime and, as your business evolves, so will your tax strategies
There are several key considerations and problems we see on a regular basis when providing tax strategy, planning and ongoing tax support. These include:
Initial tax structures must have sufficient flexibility to accommodate unforeseen circumstances, such as economic downturns, unexpected sale opportunities and family changes
An initial plan that works for one set of circumstances can be costly to change for new situations or even create unnecessary and unexpected tax liabilities
- Tax legislation is unclear and all tax plans involve a certain amount of risk; therefore, it is critical that business owners keep their unique risk levels
Optimizing the tax function is an important objective for any organization – no matter how big or small. A proactive approach to developing a tax strategy will help prepare your business for long-term success.