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An Overview of Tax Planning for Small Businesses in Highland Park

Highland Park is an important city that’s gaining popularity because of its local businesses. The city appreciates their importance and the contribution they make to the city’s image.

According to a Highland Park accountant, the city offers many incentives to local businesses and independent merchants.

The Importance of Small Businesses in Highland Park and the Challenges They Face

For the most part, Americans are affectionate toward small, local businesses. They believe that family-owned companies and startups are the backbone of the American economy, because the entrepreneurial vigor and healthy competition in the marketplace can result in innovation and better service.
It’s important to understand the challenges that companies face while they’re in the startup phase. Financial and taxation services for larger organizations may not work for smaller companies, but not all startups are aware of the tax incentives that can work to their benefit. This article is about discussing the options small businesses in Highland Park have with regard to tax planning.
Tax Evasion and Tax Avoidance

Tax rules can be hard for a business owner to understand. This also applies to e-commerce companies, which are subjected to various types of taxation. One of the common misconceptions is that that tax evasion and tax avoidance are the same thing, but they’re not.

Tax avoidance involves careful planning to reduce a person’s tax bill. This is done by deducting certain expenses, and it is a legal part of the tax system. Tax evasion is a fraudulent attempt to avoid paying taxes.

This can be done in a variety of ways, some of which can include:

  • Claiming tax deductions without verification
  • Failing to report some sources of your income (i.e. sales receipts)
  • Failing to maintain consistent and complete financial records

If you want to understand more about the differences between the two, you can always speak to a Highland Park accountant.

The Importance of Tax Planning and a Highland Park Accountant

The misconceptions about taxation and lack of tax planning can lead to many serious problems and penalties for business owners. To benefit the most from these provisions, and to handle transactions to lower your tax bill, it’s important for Highland Park businesses to speak to a tax professional or financial advisor.

Regardless of how the business is structured, there are many tax strategies available, and each one is based on the specific goals of the business owner or the business itself.

Some of the common and important objectives of tax planning are:

  • Lowering tax bills
  • Controlling the deadline for paying taxes
  • Benefiting from any available tax credits

Be sure to speak to a Highland Park accountant for more information.

 

Making a Tax Strategy for Your Business

Before you can put together a tax strategy, you need to estimate your income for the next few years. One strategy may lower your tax bill on one income, but it may increase it on another. To avoid this mistake, you must set approximate tax brackets that are based on a close estimate of your future income. The more accurate your estimate, the more successful your tax planning efforts will be.

A common strategy for lowering your taxes is to claim any deductions for which you qualify, even those that relate to entertainment and traveling. Deductions on business entertainment tax are legal if it is directly related to your business, but you must keep records and plan your event appropriately. A dinner at a night club can’t be seen as business entertainment, because a professional meeting requires an environment that is free from distraction. But you can get a deduction on your traveling expenses if you can justify it as a business trip.

Tax planning can be difficult for small businesses, because the regulations can be difficult to understand.

If you want more information and guidance, you should speak to a Highland Park accountant to help you. GLG Accounting is always there to give you valuable tax advice. So, get in touch with us today!