Is There a Difference Between Tax Preparation and Tax Planning?
There’s a good chance you cringe when you hear the word “taxes” being used in any sense. It’s a word that comes with plenty of negative emotions and bad memories, but is a vital component to the operations of your business.
If you’re one of those that cringe at the thought of planning and filing your taxes, don’t worry. Some people actually love taxes and are eager to assist you with your tax needs. After all, you have a business to run. With professional help, you can have all of your tax responsibilities taken care of by an outside source — giving you the time you need to run your business effectively.
When searching for the right service for your company, having an all-in-one service is your best option. Not every business will call for that, so knowing the differences between the major services offered by these companies can help you choose what’s best for you.
While tax preparation and tax planning might sound similar, they are two totally different services. We’ll dive into more on each below.
What is Tax Preparation?
Tax preparation refers to preparing and submitting your tax return to the IRS by a specified date. This is something that is done at the beginning of every year and is essential to maintaining good standing with the IRS. The last thing your company needs is to be on the watchlist of the IRS.
Your tax professional will be able to make sure your tax return is filled out properly and sent to the IRS on time. For new business owners, this can be a stressful time if you’re expecting it to be similar to filing as an employee. There are a lot of different moving parts added when filing for your business, but a professional can relieve you of all this stress
What is Tax Planning?
Tax planning will also deal with your tax return, but it’s more of a long-term approach that will put your business in a position to succeed moving forward. With proper tax planning, you’ll not only follow the tax, but use it to your advantage. There are plenty of ins-and-outs to the tax code that will help protect your company’s profits and prevent losses.
While tax preparation is something done at the beginning of every year, tax planning is done throughout the year as your business performs or underperforms. Having a professional will not only relieve you of this responsibility, but will give you an expert to consult with regularly. This will help you ensure your business remains on track to promote growth
As your business grows, it becomes essential to delegate certain aspects of your operations to the professionals. Even small businesses can benefit from having an expert on board! If you cringe when you hear “taxes” brought up in a conversation, it might be a good idea to reach out to a professional.
Luckily for you, we’re here to help. If you have any questions about your current situation or want to put your business in a better position than it was yesterday, don’t hesitate to give us a call! We’d be happy to assist you with any of your tax planning or tax preparation needs.