Small Business Accounting - Tax planning is the process of looking at various tax options
to determine when, whether, and how to conduct business and personal
transactions to reduce or eliminate tax liability.
Many small business
owners ignore tax planning and don't even think about their taxes until it's
time to meet with their accountants once a year. But tax planning is an ongoing
process and good tax advice is a valuable commodity. It is to your benefit to
review your income and expenses monthly and meet with your CPA or tax advisor quarterly
to analyze how you can take full advantage of the provisions, credits, and
deductions that are legally available to you.
Although tax avoidance
planning is legal, tax evasion - the reduction of tax through deceit,
subterfuge, or concealment - is not. Frequently what sets tax evasion apart
from tax avoidance is the IRS's finding that there was fraudulent intent on the
part of the business owner. The following are four of the areas the IRS
examiners commonly focus on as pointing to possible fraud:
Failure to report
substantial amounts of income such as a shareholder's failure to report
dividends or a store owner's failure to report a portion of the daily business
receipts.
Claims for fictitious or
improper deductions on a return such as a sales representative's substantial
overstatement of travel expenses or a taxpayer's claim of a large deduction for
charitable contributions when no verification exists.
Accounting
irregularities such as a business's failure to keep adequate records or a
discrepancy between amounts reported on a corporation's return and amounts
reported on its financial statements.
Improper allocation of
income to a related taxpayer who is in a lower tax bracket such as where a
corporation makes distributions to the controlling shareholder's children.
We're here to help! For
no obligation free consultation contact us today!
Amare
Berhie, Senior Accountant
CFO Services http://youtu.be/EYJdQtbPZAI
(651)
300-4777
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