Best practice tax planning
No one likes to think about taxes and tax planning. But the reality is that proper and best practice tax planning is not only important, but it can save you a lot of money and headaches in the future.
Hiring a good tax accountant or financial planner is money well spent, especially for those that run their own business, own property or have substantial investments. But everyone can make good use of best practice tax planning by reducing taxes paid or by properly utilising tax credits offered by the government. The motto should be maximise income and minimise taxes!
Tax planning can come in many shapes and forms, but the main goal of tax planning is to minimise the amount of taxes you pay. As you may know, the government levies numerous taxes on its residents - not only income tax. And since taxation laws and credit change year-to-year, it is best to seek professional advice.
Tax planning should not be mistaken with tax evasion, which is illegal. A good tax planner will help you figure out legal ways to minimise your tax liability.
Best practice in tax planning means that the accountant or financial planner is utilising the most up-to-date tax and ethical codes to give the best advice to clients. Since tax codes and rules change fairly frequently, it is important to find a company that firmly believes and follows best practice policies.
Tax planning for businesses
For potential business owners or start-ups, best practice tax planning is important at the initial establishment phase. Business structure is probably the most important factor when it comes to tax matters. The amount of tax levied and how much control you can assert will vary greatly between structures such as partnerships, sole proprietorships or companies. The type of business structure will also determine the degree of control or ownership of the company as well as legal status when it comes to law suits or other hurdles a business may face.
Tax planning for individuals
For individuals, best practice tax planning can be part of an overall financial or estate planning package. Accountants and financial planners can advise on how income tax can be reduced in a best practice and legal manner and advise on what, if any, tax credits may apply. Tax planning becomes especially important for reducing inheritance tax, making a will, charitable giving and the establishment of financial tools such as trusts.
Tax planning for investments and pensions
Best practice tax planning also comes into play when considering investments, retirement and pensions. For investments, you want to maximise your returns and minimise the amount of tax you pay on your profit or income. A tax accountant can advise you on tax-efficient investment schemes or utilise tax relief, which will help you realise the highest rate of return possible on your investment.
The same applies to retirement and pensions. At the age of retirement, as your income declines, you really want to maximise the income you will receive from your pension and investments and minimise your tax liability. In this day and age, it is no longer wise to rely simply on a state pension. This means that many people have private investments or pension plans to supplement their state pension income. In best practice tax planning, it is important to see what your income will be post-retirement and to adjust your investment and pension schemes to maximise the money that will physically go into your pocket.
To discuss you business or personal tax planning issues then please contact us and we will happy to discuss your tax planning credentials.