Archive for the ‘Accounting’ Category

How Small Businesses Are Benefiting From Tax Laws

The recent changes in the tax laws have definitely put small businesses in a tight spot. There is no denying this fact. But that in no way means that small businesses cannot work their way around it in order to mitigate the effects of such aggressive tax laws. For starters, aggressive year-end tax strategies is not what small business owners should be banking upon at this point of time. Your tax strategies should not be stringent. They should be flexible enough to accommodate benefits or losses incurred due to preplanned or unplanned policies.

A small business cannot always plan all its expenses in advance. It is common knowledge that there are times when a small business owner needs to pump more money into the venture than was planned in order to cover up some extra efforts that the company is probably making that could be related to marketing, increased production, etc. Alternately, there are times when a company is not able to spend as much as it set out to due to some reasons. This is why planning taxes in advance makes them bound to a plan and unable to make changes that would benefit them in the long run.

It is prudent that you try and maximize your deductions in order to minimize your taxes. When following this advice, keep a tab on the timing. In case you’ve had a particularly bad year financially, and you do not expect a change from this in the next year too, you would be placed in a lower tax bracket. So you do not need to take deductions right now, as your taxes would already be low. If things turn around however, you will be placed in the higher tax bracket, and this is when you should implement your deductions plan.

It is important that you as a business owner understand that when you spend $1, it is not $1 worth of tax paid, but $1 worth of money spent. So don’t just go about spending money hastily for no reason in order to save tax.

The most commonly held false notion surrounding year-end tax planning is that it is wise to ‘zero out your business bank account by 12/31′. While this is a good way to defer present year’s taxes into the next year’s it will not result in any complete tax deferral. Make sure you make your company’s tax strategies keeping the above points in the hindsight.

How Can Chartered Accounts Help You Survive Tax Investigations?

Tax investigations are no less than an actual nightmare scenario. It really does not feel great to have an envelope dropped at your doorway, announcing an income tax investigation to be conducted on a particular date. Sometimes, despite having done nothing illegal or wrong, people have to undergo the stress of this extremely time consuming process. The worst is when the tax investigations drag on for months and years. Usually, the income tax department does not provide any reasons for beginning an investigation into your tax affairs, as some are just random picks. However, majority of the cases start because the tax department suspects that something might be incorrect with the figures in the tax return. Thus, people who have to deal with an income tax investigation must seek professional guidance of a qualified Chartered Accountant.

These professionals can help you survive such inquiries with their expert skills in managing tax affairs. As they are highly knowledgeable about the whole process, called tax investigation, they can successfully represent your side in front of the taxmen. This way you can rest assured and concentrate on business and private affairs. A chartered accountant would not only make sure that your income tax affairs are correct and up-to-date, but would also attend meetings, as well as negotiate with the taxmen. People who have attended a long interview with the tax inspectors can testify as how difficult and probing they are. A qualified chartered accountant would have an extensive knowledge about the information that officials are most likely to ask for and also, the questions which they might ask. A Chartered Accountant can even attend most of the meetings on the behalf of his client and thereby, reduce their anxiety of meeting the inspectors in person.

In case of outstanding tax, the accountant would negotiate with taxmen to decrease the remaining amount, as well as penalties. If you cooperate with the officials and provide full disclosure, then you can prevent yourself from being imposed heavy fines. The accountants usually know this fact and see to it that their clients are as cooperative to the inspectors as possible. Once the outstanding figure is decided, the officials generally request the person to pay the amount immediately. However, in case you do not have the needed amount at present, then your accountant can negotiate with the officials to give you more time to pay the money. While no one really relishes the thought of an income tax investigation, hiring the expert services of a qualified and reliable accountant can actually save you a great deal of money, worry and stress and therefore, help you successfully survive tax investigations, no matter how rigorous they are.

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