Business Tax Planning: Don’t Leave Money on the Table

Although some businesses put tax planning on the back burner, a proactive approach can result in huge savings. In this post, we discuss how tax service firms like Dugan & Lopatka can make a big impact for mid-sized businesses.

It’s an unfortunate (and ironic) fact that many businesses – which are otherwise fiscally responsible, trimming unnecessary costs and boosting efficiency whenever possible – pay more taxes than necessary. They invest so much time fine-tuning their operations. And yet, when it comes to their own taxes, they leave money on the table.

It’s especially unfortunate that this tends to happen to mid-sized businesses. Although one could argue that these businesses have the most to gain from tax planning – they tend to operate on thin margins; no doubt they could benefit from a lighter tax burden – they often fail to devote the proper time and resources to tax planning.

Why? Because, unlike larger companies, mid-sized businesses don’t have an army of accountants on staff, pouring through the tax code and developing a tailored strategy to maximized their savings.

The tax code is nothing if not complicated—not only because it’s dense and packed full of accounting jargon, but because it’s always changing. And businesses, which also exist in a continual state of change, are no less complex. Developing a strategy requires one to understand the intricacies of both the tax code and the business, and that takes time and serious expertise.

Although the owners and executives of mid-sized businesses wear many hats, their attention is usually centered on other aspects of their business—they’re busy running their company, after all. Unfortunately, all too often, that means tax planning is left on the back burner.

But it doesn’t belong there. It’s no secret that tax planning is a legitimate money-saving opportunity – why else would large corporations invest massive amounts of capital in it? – but what many mid-sized businesses don’t realize is that they don’t need an expensive army of accountants on-staff to realize huge tax savings. What they need is the right partner.

Providing tax planning strategies in Chicago for more than 45 years, Dugan & Lopatka has worked with a variety of mid-sized businesses and nonprofit organizations. While we help our clients file their taxes, we are much more than a tax-preparer. Our certified public accountants take a comprehensive approach, developing a strategy that aligns your business objectives and specific investments with cashflow projections and tax-savings opportunities. As the tax code changes each year, along with your business’ financial situation, we adjust our approach.

By taking a comprehensive, proactive and flexible approach to your financial strategy, in which tax planning plays a pivotal role, you can be confident that your business is operating as efficiently as possible.

Often, clients who come to us for business tax planning services are shocked to discover just how much money they have left on the table in previous years, in the form of credits they never thought to pursue or well-timed investments that could have reduced their tax liability. Once they see the ROI of smart corporate tax planning, they understand that no business strategy is complete without it.

What are the benefits of business tax planning?

A proactive tax strategy not only identifies opportunities to save; it helps your business plan investments and make other business decisions that result in future savings. Some of the benefits of a good strategy include:

Identifying and pursuing tax credits. From research tax credits and energy certifications to new markets credits and many others, there is a huge variety of tax credits. But you can only receive these benefits if you identify tax credits for which you may be eligible and submit an application with the proper documentation—no one at the IRS is going to come to your business and tell you that you’re eligible.

The list of available tax credits is long and constantly changing, and, unfortunately, many mid-sized businesses miss out on credits for which they are likely eligible.

As your accounting firm, Dugan & Lopatka will help you identify and apply to tax credits and other opportunities for deductions. And whenever possible, we will provide recommendations to help you adjust your operations to make your business eligible for additional deductions. (For example, many manufacturers can become eligible for R&D tax credits if they invest in improvements for their own processes. You can learn more about the R&D credit for manufacturers in our recent blog post.)

Timing your investments for maximum savings. For our team, one of the most rewarding aspects of our work is when we bring together the many parts of a business, finding synergy between their objectives, operations, cashflow and tax strategy—and creating opportunities that simply wouldn’t be possible with a siloed approach.

Deciding when and how to make an investment is one point where this approach really shines.

While most business owners appreciate the importance of timing an investment based on cashflow – a poorly timed investment can create a negative cashflow situation, sending a business spiraling into debt and making it difficult to cover essential operational expenses – fewer understand the importance of timing one’s investments with the tax code.

Often, making certain investments at certain times of the year (particularly the year’s end) allows businesses to write-off a portion of their expenses, reducing their burden. As we mentioned above, the tax code is dynamic, and there are times when a business can reap substantial savings by making an investment before a program expires.

The Bigger Picture of Your Business

Although good accounting is all about adapting to change – changes in the tax code, across industries, within our clients’ businesses, and within our own firm – there is one thing that, over our many years of service, has stayed the same.

A financial approach is only as strong as the business it serves (and vice versa).

Accounting is about more than ‘just’ tax planning, cashflow projections, or any single service we provide. It’s about how all these services come together and harmonize with the rest of the business to create success. Clearly, we are big believers in the big picture, and when you work with our team for any service or combination of services – from succession planning to end-of-year tax tips – we account for how our work contributes to the overall success of your business.

To learn how smart tax planning can help your business achieve its goals, contact our team today.

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