When you initially grasp that taxes stand as your most substantial personal and business expense, it can be disconcerting to witness a significant portion of your hard-earned income diverted to the government. However, dedicating a relatively small amount of time and effort to strategically minimize your taxes can yield significant returns.
Some individuals may shy away from employing creative tax strategies due to concerns about potential IRS issues. It’s essential to understand that, when executed correctly, there’s nothing illegal or risky about pursuing strategies to minimize tax liability.
Evading taxes, however, is illegal. As the late Martin Ginsburg, Georgetown Law professor, and spouse of the recently departed Supreme Court Justice Ruth Bader Ginsburg, used to emphasize, “Pigs get fat; hogs get slaughtered.” In essence, while seeking intelligent ways to save on taxes is prudent, excessive greed can lead to trouble.
As we approach the conclusion of 2022, we enter a crucial phase for tax strategy. This two-part series outlines how you can optimize your tax savings without crossing legal boundaries.
ESTABLISH YOUR FOUNDATION
To achieve substantial tax savings in 2022, the initial step involves either constructing or revitalizing your relationship with a team of financial professionals. This team, including us, your Family Business Lawyer™, a bookkeeper/financial manager, and a tax advisor, will aid in laying the groundwork for formulating and executing your tax-saving strategies.
Ensure that your bookkeeper actively manages your books on a week-to-week basis, engaging in tasks like daily/weekly cash-flow management, monthly expense report review and categorization, and quarterly forecast and projection updates. If your current bookkeeper falls short in delivering these services, consider finding a replacement or providing additional training.
Your tax advisor, responsible for filing your taxes, should ideally be met with at least twice a year: once in May/June for a mid-year review and once in October/November to prepare for year-end. The October/November meeting is particularly crucial, involving cash flow projections, tax estimates, and discussions about various tax-saving strategies.
If your tax advisor is solely a tax filer and cannot provide this comprehensive service, it might be time to seek a more capable advisor. As your Family Business Lawyer™, we can assist in finding a qualified tax advisor if needed.
Moreover, our regular meetings with clients and their financial professionals ensure that financial strategies align with the legal implementation necessary for seamless integration. If you’re considering how we can support you in this aspect, feel free to reach out.
IMPLEMENTING YOUR STRATEGIES
In the next segment, we will delve into the development and execution of creative tax strategies that empower you to retain more of your income. For any inquiries about reducing your upcoming tax bill, contact us. Stay tuned for part two, where we will continue exploring ways to save significantly on your 2022 taxes.
This article is presented by Michelle Bell, an expert in estate planning and business succession services. Our office provides comprehensive legal support for businesses, assisting you in making informed decisions throughout your entrepreneurial journey and in planning for future contingencies. We also offer a specialized session where we review your business’s legal structures. To arrange this consultation, please click the following link: https://calendly.com/mcblawpllc/30min.
The information in this article is intended purely for educational and informational use and should not be considered as advice on ERISA, tax, legal, or investment matters. For advice specifically tailored to your unique situation, such advice should be sought independently from this educational content.