More often than not, the most costly tax mistakes we see are not errors, but missed opportunities, including overlooked opportunities for long-term planning, strategic deductions, and reduction of your lifetime tax liability.
“That’s all the more true for business owners, who have complex tax blueprints that include both personal and corporate returns,” explained John Vance, President of Vance Wealth. “From payroll and 401k plans to retirement and investments, there’s a lot to consider when building a tax plan that’s designed to help owners build wealth.”
In fact, the easiest way to make a mistake on your tax return is to skip the crucial planning steps that identify opportunities across all of these different areas.
Though many business owners and tax professionals focus on avoiding errors, the biggest mistake is often the missed opportunity. Don’t waste another year missing out on these three significant opportunities.
3 Tax Planning Opportunities
If you’re like many business owners, you rely on a team of one – your accountant – to prepare your tax return each year. Then, when it comes time to review your return, you give it a quick glance and sign it without actually knowing what it says.
“That’s really normal because you’re neither equipped nor expected to understand the details of your tax return. That’s why you hire a professional and assume they’ve done it all correctly,” John explained. “By working with a team of professionals, however, this responsibility doesn’t fall on the shoulders of just one person.”
Plus, each trusted professional brings something different to the table. For example, an accountant works on the compliance elements of your tax return and collects, prepares, and files the essential documents. A financial planner, on the other hand, works in conjunction with the accountant to create a long-term, comprehensive tax strategy.
“Working with a team of professionals ensures that you have a second pair of eyes on your return,” John explained. “It also means you have a plan that looks at your taxes within the larger context of your financial goals.”
At Vance Wealth, tax planning is a consistent process that spans the entire year. Once your big-picture plan is in place, we meet with you annually to make any necessary course corrections. Then, when it comes time to file, we request a draft of your tax return before it’s submitted.
“This process is built into our service model to ensure a more thorough review and minimize amendments. Amending a tax return isn’t ideal because it takes more time, and it could increase the risk of an audit,” John explained. “This is even more important for our business owner clients because of the higher level of complexity.”
A draft review allows your entire team to catch errors or omissions while there’s still time to correct them without penalty.
Another way to give your team enough time for thorough planning is to file an extension.
“Many people have the idea that filing an extension is bad,” John explained. “Unless you’re counting on a really big refund, there’s no reason that you need to file on the first deadline – especially if it’s advantageous to wait.”
An extension allows your team to collaborate and discuss the best course of action, ensuring optimal savings now and in the future. Not only are you avoiding the rush that comes with the busy tax season, but there’s also anecdotal evidence suggesting that an extension can reduce your chance of an audit.
“Time, collaboration, and attention to detail can be more beneficial than an early return,” John explained, “because you can rest assured it’s being done right the first time.”
If you want to avoid missing these significant opportunities for tax savings, we encourage you to schedule a complimentary tax review with one of our Wealth Advisors – before it’s too late. Our team of advisors gets busier as year-end approaches, so the time to act is now. Book your complimentary consultation today: https://vancewealth. com/book-an-appointment/
The information provided is for educational and informational purposes only and does not constitute advice. Vance Wealth does not provide tax or legal advice. You should contact your tax advisor and/or attorney before making any decisions with tax or legal implications.