It’s time for our annual series again — How to Save Big Money on Your Taxes This year.
We run this series every year at this time because now is the time for you to take action and strategize big savings.
It can be shocking to realize that your biggest personal and business expense, bar none, is taxes. The good news is that just a little time and effort focused on strategically reducing your taxes can pay big dividends.
The first thing to know about taxes is that it is not illegal to strategize to save money on your taxes. Many business owners are held back from using creative tax strategies because they have a fear that it’s dangerous or risky. It’s not, as long as you are smart about it.
It is illegal to evade taxes. It is not illegal to educate yourself and make smart strategic choices that lead to you paying less taxes. As Martin Ginsburg (my tax professor in law school and also husband of Ruth Bader Ginsburg) often reminded us “pigs get fat, hogs get slaughtered.”
And since this is the most important time of the year when it comes to tax strategy, I’m going to be sharing a series of articles on how to get fat, but not slaughtered when it comes to your taxes.
The first smart strategic move you can make when it comes to saving big money on your taxes is to build or rekindle your relationship with a creative financial manager/bookkeeper and a Certified Public Accountant (CPA) or Enrolled Agent (EA) for tax advice and filing your taxes.
Your financial manager/bookkeeper is the person who will be managing your books on a week to week basis. Notice I did say “week to week” — that means not month to month, or quarter to quarter.
If you are in business, you need at least weekly (if not daily depending on the size and type of your business) financial management, which should include daily/weekly cash flow management, monthly review of reports and categorization of expenses and quarterly updates of forecast and projections. Your financial manager/bookkeeper works with you on these items.
Your CPA or EA (hereinafter Tax Advisor) is the person who actually files your taxes. Ideally, you meet with your Tax Advisor twice a year in May/June (after tax season and a vacation for your Tax Advisor) and then again in October or November.
The May/June Meeting is for a general catch up, mid-year review that lets your tax advisor know what you are on track to do for the year, financially, so that strategy can begin to be considered. Then, when you meet again in October/November, it’s about getting down to business, projecting cash flow through the end of the year, and getting a tax estimate using different assumptions with and without tax saving strategies included.
If your Tax Advisor cannot provide this and is only a tax filer, you’ll know it’s time to find a new Tax Advisor. We can help you with that, so be sure to contact us, if you find you do not have a Creative Tax Advisor.
If you have not had your year-end tax meeting yet, it’s not too late (though it’s close) to get scheduled. Contact us for a referral and find out how we can attend your tax meetings with you and why that would be beneficial.
This is the first step in saving big money on your taxes. I’ll be back with weekly articles that will give you more a-ha’s and awarenesses when it comes to keeping more of your money in your family and business and out of the hands of the government, unnecessarily.
If you have specific questions you would like answered when it comes to saving big money on your taxes, simply hit reply and let me know so I can be sure to address them in an upcoming article or newsletter.