Every entrepreneur knows he or she should be planning their taxes before the actual April 15th deadline, right? But what a lot of entrepreneurs fail to recognize is that they not only should be done planning their 2020 taxes by now, but they should also be planning for their 2021 AND 2022 taxes in the first quarter of this year. Seem a little ambitious? It’s actually just good business. Here’s why.
You’re Overdue Planning for 2021
We are almost into the third month of 2021. That means that if you have not yet started planning your taxes, you’ve already missed two solid months of possible savings. It’s so easy to hold off on your taxes later and later each year. After all, they aren’t due until April of next year, right? However, what you do throughout the year determines what your tax situation will look like come Tax Day. And no amount of maneuvering or creative accounting can make up for poor planning.
Plan Now for 2022
2022 may be 10 months in the future, but it’s never too early to start planning when it comes to taxes. When you plan now for 2022, you have plenty of time to get your ducks in a row so you can take advantage of all the tax savings available to you. It also helps you set up your business and schedule ahead of time so that you won’t be struggling to make changes at the last minute.
What to Plan For
So we’ve established that planning early is key, right? Now the question is, what exactly do I need to be planning? Here are the most important:
- The structure of your business. The structure of your business matters when it comes to taxes. Whether you’re set up as an LLC, S Corp, sole proprietor, or partnership has bearing on how your taxes will be set up. Taking advantage of the tax code whenever you can is key to running a successful and profitable business. The best way to determine the best structure of your business is to work with an experienced CPA or business attorney who can guide you through the process and make smart decisions.
- Capturing business expenses With the work-from-home trend and more entrepreneurs realizing they don’t even need physical offices, there are more opportunities than ever to capture and write off business expenses. Whether you continue to work from home part or full-time, you need to make sure you’re keeping track of expenses like wear and tear and mileage on your vehicle, office supplies you’re using at home, your home office, and any business lunches or dinners. They may not seem like a lot at the time, but they add up quickly and can make a huge impact on your end-of-year tax bill.
- Specialized knowledge In addition to being fantastic ass-kicking sources who can help you get your butt in gear, mentors and coaches can also teach you about lesser town techniques to help you save on your taxes. This includes things like establishing an entity in a tax-free state and taking tax-free withdrawals from your business. When you work one-on-one with a coach or take one of their online courses, you can learn invaluable information that will help you save money each year.
2021 is already ticking away. If you’ve not yet started planning your taxes for this and next year, time is running out. Reach out to a CPA or business attorney and consider working with a good coach to make sure you’ve got everything set for Tax Day.
