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Why Schedule a Tax Planning Meeting?

Most people think that if they get great tax advice at the beginning of the year, they could govern themselves appropriately, run their business well, and end up paying their (minimum) fair share of taxes. They're correct to a degree, but planning taxes is sort of like making chili: a lot goes into it, it’s easy to mess up, and some tweaks are often required along the way. Tax advice at the beginning of the year is like a recipe: it tells you what to do in general terms, but it doesn’t tell you whether the finished product is correct or not. Tax planning at the end of the year is like tasting the chili before you serve it: you can adjust the finished product in a way that ends up making all the difference. If you’re going to make chili, it’s nice to have a great recipe AND taste the chili to see if it needs more spice or more salt; likewise, it’s great to be able to utilize professional tax advice throughout the year. It’s even better if you can make adjustments at the end based on your actual results.

So how does tax planning work, exactly? In some people’s case, they run their business as usual during the year, then call up their friendly tax planners when they have a tax question. At the end of the year, most people gather up as much documentation as possible and bring it in to an appointment. We construct a rough version of their tax return and look for ways they can save money before the clock strikes midnight on December 31. We work with them to make sure any tax strategies they employ will also work with their business strategy, and at the end we re-run through their tax return to figure out how much they will save by making a few adjustments.

What are those adjustments? The key is that they’re tailored to the individual client. Sometimes we advise individuals to accelerate some purchases they were planning to save for a future year, and sometimes we recommend they delay on some things they were planning to do right away.

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