The uncertainty of the global recession coupled with the so-called fiscal cliff in the United States will have a considerable impact on the taxes paid by individuals and organizations beginning on 1 January 2013. This is the result of the implementation of the Budget Control Act of 2011, which will lead to substantial decreases in budgets for government programs and significant increases in taxes. Effective tax planning is, indeed, a necessity for businesses to survive during these tough economic times.
Examples of such double whammies include the end of the 2% payroll tax cuts for workers and the tax breaks for businesses, both of which were obviously favorable to the taxpayers. Add in the increase in taxes resulting from Obama administration’s healthcare reform law and the alternative minimum tax law and you have a greater number of challenges in tax planning.
Fortunately, the best Rochester accountant can provide expert services in planning for your business taxes. You are not alone in facing the challenges of the new tax schemes so tap into it for your own good.
What kinds of advice can you receive from the Rochester accountant in planning for the tax challenges in 2013? A few of the most important tips:
• Carefully evaluate your business decisions so that these make good economic sense both in terms of earning income and saving on taxes. Always look at the short-term and long-term implications.
• Continue tax planning activities the whole year-round. Avoid making the mistake of looking at your tax status during the tax season and during the end of the year. With year-round tax-related planning, you can make the necessary adjustments as the need arises.
It also pays to adopt the right attitude toward the professionals who can provide expert assistance. You must consult with your tax accountant on a regular basis to evaluate your unique situation and, thus, develop an effective tax plan. You must also be aware of new legislation that can affect your tax status, such as the abovementioned tax increases. And speaking of legislation, you must undertake tax planning activities to take into account new laws passed by Congress. Discuss the tax implications of the law and then make the necessary changes to your tax strategy, all with the aim of maximizing your tax savings.
With that being said, what can you do to maximize your tax savings? Think of the following options and you are more likely to triumph over the tax challenges in 2013:
• Defer your taxable income from 2012 into 2013. This is advisable for individuals and businesses who expect to be in a lower tax bracket in 2013. Businesses can also defer taxable income by accelerating the deductible expenditures into 2013.
• Accelerate your income when you are subject to the alternative minimum tax law. You can save as much as 7% on each taxable dollar.
• Take advantage of the 0% rate in 2012 since it may not be available in 2013, no thanks to the expiry of the Bush tax cuts.
If the above mentioned discussion is all Greek to you, then contact the professionals for effective tax planning. Your tax savings may just spell the difference between your business staying afloat or sinking with the economy.
RDG+Partners wants to be the primary advisor for motivated business owners. The firm is committed to providing boutique level accounting, tax and business consulting services to the Rochester, NY community.