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Without Proactive Tax Planning, How Much Money Will You Miss Out On?

When is the best time to begin thinking about next year’s tax return? Today! Instead, by working with a Certified Tax Planner, they take their time to formulate the best methods for minimizing their tax bill, factoring in steps they can take this year and even goals they want to achieve years down the road. 

Taxpayers will need to work with their tax advisor not just on a tax strategy but also on an implementation plan. Before you begin working with a Certified Tax Planner, you will start with a brief discovery session where you will share your tax returns and receive input on any missed opportunities for savings. 

After this, you will officially sign on to begin the planning process. Your tax planner will start their research, run calculations, and perform an analysis to identify the optimal steps to create maximum tax savings. Once you have agreed on a strategy, you discuss what needs to happen next: in other words, what do we do in terms of implementation? Your tax advisor will help you create a detailed implementation plan based on how you respond to questions about these three elements: resources, timeline, and goals. 


First, the conversation will focus on what you already have. Have you already set up any business entities like an LLC or a C corporation? Do you own entities that you are not actively using—where you have yet to maximize their potential? With the help of your tax planner, you may be able to shift responsibilities or income streams among these existing entities to make implementation simpler and save money.

Second, what type of personnel and skill sets do you have access to? Have you already worked with an attorney, financial advisor, insurance agent, bookkeeper, or payroll provider? If you do run a business, what are those employees’ realms of expertise? Who is available when? Time tends to be a scarce resource for business owners, so you can avoid becoming a roadblock by proactively identifying others who can relay information to your tax planner and help you hit critical deadlines to make the tax plan work. 


The next step is to develop a big picture timeline for executing on your tax plan. Consider the rhythms of your business throughout the year. Are you busy at certain times? Are you closed on special dates due to holidays or personal needs? Make sure these changes in availability don’t prevent you from moving forward on your tax plan.

Next, you will want to figure out which items in your plan are the most time-sensitive. Your tax planner can advise on which items need to be prioritized in order to get the most savings out of it. They can also advise you on any relevant cut off periods toward the end of the calendar year or around filing deadlines. 

Lastly, which items have no connection to timing? An example might be retirement planning. For instance, if you decide on a Roth IRA conversion strategy, the deadline for the conversion is not until December. You can factor this into your tax plan and take action when it makes the most sense to do so financially. 


As impactful as tax savings can be for your financial stability and the future of your business, lowering your tax bill is likely not your only goal in life. If you prefer to prioritize certain steps, such as forming a new entity or hiring a specialist, to free up your time now or get the expense out of the way, be sure to communicate that to your tax planner. 

You will also want to talk through the objectives for each item in your tax plan. We are not looking to implement tax strategies just because they are trendy or commonly used by other business owners—they have to truly be beneficial for you and your unique circumstances. This means that the question of whether you will open a new entity or a retirement plan will come down to your short and long term goals. 

Lastly, your tax planner will ensure that each item links back to its overall purpose. For instance, putting a property into an LLC can be helpful if one of your goals is personal asset protection, but creating an LLC in and of itself does not guarantee tax savings unless it is functioning as part of an overall plan. If your overall purpose is to reduce personal liability, then this step could make sense. If the goal is tax savings, you will need to talk through the details of your unique situation with your tax planner to determine if this is a wise strategy.

Implementation is the necessary partner to any great tax strategy. This means formulating a detailed plan, delegating tasks to your business team and contracted specialists, and overseeing each player’s progress. At the end of the day, the investment you make in creating and executing on an implementation plan will be well worth it when you see that reduced tax bill next spring. 

To learn more about the countless benefits of proactive tax planning, contact a Certified Tax Planner today

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