Tax season is now well underway, and you may be wondering how to handle your taxes. Many people are confused about the difference between tax compliance and tax planning. The two are related, but they serve different purposes. When you incorporate your firm, it becomes a distinct entity for tax reasons.
This entails more tax compliance and paperwork for you and your accountant. However, it also offers additional opportunities for corporate tax planning. In this post, we will discuss the difference between tax compliance strategies and tax planning strategies so that you know what’s best for your specific situation!
Tax Compliance
Tax compliance entails complying with the regulations established by the Internal Revenue Service (IRS) and other tax agencies that enforce state and local tax laws. This covers not just income taxes, but also sales taxes and even property taxes. Tax compliance is adhering to tax rules and timely filing of tax-related documentation.
When you’re busy running a business, it’s nearly hard to keep up with all of the tax updates and notifications. That is why it is critical to locate a CPA that can monitor these things for you and notify you if there is a change that may affect your tax situation.
Tax Planning
If you want to save the most money on taxes, you should collaborate with a CPA or tax adviser who will go above and beyond compliance work to proactively design the best tax solutions for you. Tax planning is the process of establishing solutions that make the most sense for you and your company. This is frequently a method that results in you paying less tax in your corporation.
When there are alternatives for filing your taxes, there will be requirements you must fulfill in order to choose a specific method. During a tax planning session, your accountant will examine items like these to ensure you save the most tax while being compliant.
A Fresh Start On Your Taxes
We have a self-reporting tax system in the United States. This means that it is the taxpayer’s responsibility to claim all of the deductions and credits to which they are entitled. The IRS will not notify you if you have missed a deadline unless it means extra money in their pocket. They aren’t interested in saving you the most money on taxes, but your accountant is. One of the most crucial steps to being ahead of the IRS is to start with a clean slate. This process is a lot easier than it seems. If you found yourself with a collective tax debt of $10,000 or more, there’s a solution to that problem.
There is a new and improved relief program that consolidates many major relief programs into a one-size-fits-all assistance program. Any issues regarding back taxes, unfiled years, or any other tax-related problems may be solved through one program; the IRS Fresh Start Program!
How Simple Is Qualifying?
Considering that the Fresh Start Program is a federal program, you would think meeting the qualifications may be very difficult, but really, it’s a lot simpler and quicker than you think. Take the following steps in order to find out if you are eligible in as little as 3 minutes.
- Fill out some basic information about yourself and your back taxes here.
- Have a representative reach out to you to discuss your eligibility.
- Go through the enrollment process and finally reduce or eliminate your tax liabilities.
