Tax Filing vs. Tax Planning: Major Difference That Every Business Owner Needs to Know
Believe it or not, tax planning and filing are two of the most important parts of any business, which reduces penalties and promises peace of mind. As a business owner, you may get confused between tax filing and planning; that’s when an accountant in Halfmoon, NY, can help. In this article, we have listed the major differences between tax filing and planning. Let’s dive in!
What Is Tax Filing?
Tax filing is described as a process of filing ITR or income tax returns that takes place during the end of the financial year. An ITR contains all information regarding a person’s income and taxes. The major aim of filing taxes is to determine if you owe money to the IRS or will receive any refund once the financial year is over. As a business owner, you must hire an accountant to manage your taxes to avoid mistakes and conflicts.
What Is Tax Planning?
Tax planning is a process of financial planning to maximize your tax efficiency. The primary aim is to reduce overall tax liability by carefully utilizing tax rebates, exemptions and other benefits. Tax planning also includes making business and financial decisions to minimize any faults while filing taxes and making business decisions.
Benefits Of Tax Planning And Filing By An Accountant
1. Tailored Strategies
Every business has different needs and requires a unique financial solution. Based on the overall requirements, these experts formulate tailored strategies that align with your business needs and financial circumstances. They understand your income sources, financial goals, potential deductions and investments to improve tax savings. Since taxes are filled by an accountant, there are no chances of mistakes.
2. Reduced Risks and Mistakes
Most business owners make several taxation mistakes, which can cost you a hefty amount and have serious consequences like fines or penalties for potential audits. Accountants can help you mitigate the prevailing risk factors and suggest practical solutions, minimizing the chances of errors. Having an accountant on board ensures they file taxes rightly.
3. Potential Rise in Refunds
Hiring an accountant enhances or maximizes your tax refunds. As experts, they know various tips and tricks to maximize refunds that small business owners need to learn. Additionally, they educate about the complete taxation process and lower your tax liabilities. While filing taxes, accountants look for ways to increase refunds that act as additional income.
Wrapping Up
Tax filing and tax planning are important aspects of every business. As a business owner, you must hire a professional accountant to handle accounting-related tasks.
