Most people consider hiring a tax accountant for tax preparation and advice when they want to save money on their annual tax bill. However, even if your tax preparer takes advantage of every opportunity to save you and your business some money when it comes to filling out the necessary tax forms, you’re likely missing out on significant savings resulting from professional tax planning.
The distinction between tax preparation and planning can be confusing to some, but understanding the difference between these two separate services is the first step toward lowering your tax liability and minimizing your business’s tax burden in the years ahead.
Tax preparation and planning are critical components of any business’s financial planning process. In this blog, we explain the difference between tax preparation and tax planning, as well as their relationship to one another and your business.
What is Tax Preparation?
Even though a good tax preparer can sometimes find ways to save you money (they should know more about tax credits and deductions that apply to your business than the average person), the main purpose of tax preparation services is to simply fill out and file the forms you need to follow state and federal laws correctly and on time.
Once a year, after the end of the financial year and during tax season, taxes need to be done. Most businesses and people don’t have to talk to their tax return preparers more than once or twice in the few months leading up to the tax deadline.
What is Tax Planning?
The main goal of tax preparation is to make sure you’re following federal and state tax laws. On the other hand, the goal of tax planning is to help you save as much money on taxes as possible and avoid penalties as much as possible.
Tax planning is a year-round process that takes into account the client’s past tax returns, their current financial situation and regulations, their future financial goals, and what they do all year. For this reason, it’s important for a business or individuals and their tax planner to talk to each other often. This is usually done through an initial meeting and regular communication between the tax planner and the client. This is because both tax laws and the business’s situation change over time. Tax planning is a longer-term process that helps clients plan for both immediate and long-term benefits.
We Can Help You with Tax Planning and Preparation
With the help of our tax planning and tax preparation services, you can start to save money and avoid problems with the IRS. Call us at 773-582-2700 right now to talk about how we can help you manage your tax obligations and lower your tax burden, or ask for a free consultation and we’ll get in touch with you right away.
