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    Tax Preparation

    What is Tax Preparation?

    Very simply, tax preparation is an annual filing of taxes you paid all year to ensure you paid what you should have.  Your accountant reconciles what you paid versus what you should have paid.  The result is to either receive a refund or pay any additional amount.  And tax planning can help change this outcome.

    The government sets a tax percentage that applies to various brackets of income.  In the U.S. we have a progressive income tax system meaning that you pay a higher rate of tax on your income as the amount increases.  So, while your last dollar earned may fall in a higher tax bracket that doesn’t mean every dollar is taxed at that amount.  Your first dollars are taxed at lower rates. Then higher amounts are taxed at the rate for the bracket they are in.  

    You can complete your own tax preparation or have a professional do this for you.  You need to compile documents that confirm your annual income and certain expenses that are deductible.  These documents are provided to you by a variety of sources; your employer, financial institutions, charitable organizations, or even medical providers.  The most efficient way to complete this process is to do so electronically.  The IRS still accepts paper documents but it takes longer to process if you file with this method.  

    What is Tax Planning? 

    No one likes to be surprised with an unexpectedly high tax bill.  So planning ahead can eliminate unneeded worry, stress, and uncertainty.  Tax preparation is not just something we think about once a year.  There are considerations you need to keep in mind during the entire year that affect the overall taxes you owe.  It’s for this reason we work with clients to review their tax projections before the end of the year.  When you plan ahead you can take advantage of any opportunities available to you.  If you know you’ll owe a large amount in taxes we can look for planning strategies that apply to you.   

    Many people want tax preparation services to file this year’s tax return as well as know ways they can be saving more too.  Tax planning is a very common area that is not included in a typical year- end tax preparation fee.  You need to ask your tax preparer to do this for you and it typically happens during the second half of the year.  Once you have a good idea of the income you’ll receive such as any expected bonuses and employee benefits we can set a plan.  When we pair your expected income with any planning strategies we can give you a good idea of whether you’re on track with your paycheck withholdings.  By planning ahead you’ll have time to update your withholdings so you’re on track by the end of the year.

    Who Needs Tax Planning?

    The level of tax planning you need depends on the complexity of your total compensation.  If you receive a variety of benefits in different years, tax planning would be very valuable to you.  Some people receive stock compensation or large bonuses that vary year by year.  With the changes in income it’s important to plan for the timing of when you’ll receive that income.  Rather than receiving income as it comes you can plan ahead to optimize the taxes you will owe.

    The timing of employee benefits received and the tax strategies implemented are usually the biggest factor to understand.  Many times if you can receive income in a new tax year rather than 

    Tax Planning for Businesses

    Businesses have a variety of cash flowing in and out each year.  When more money is coming in from the services or products provided than the expenses incurred to provide them you have a profit.  That profit is gain from doing a good job in the business you’ve created.  That profit is what becomes taxable.  

    Your taxes that will be owed depend on the type of business you own, the type of expenses you incur, and the amount of gain you have.   

    Why Is Tax Planning Important for Businesses?

    Tax rules and regulations change constantly and it’s for this reason that planning becomes important.  Your annual business profit or loss probably changes from year to year, too.  For these two reasons alone there is planning to be done.  Some years you need cash to invest back into your business.  Other years you may be able to take that cash out as salary, increase your retirement savings, or give some of it away to charitable organizations.  

    You can see that planning ahead is important depending on the type of year it will be or has been.  There are different strategies that can be used depending on the goals you are trying to achieve.  

    Time can go by so quickly.  For the biggest effect you have to realize that it’s important to make planning a priority.  Once the first half of the year has passed it’s time to look back and see what’s happened while also looking ahead to what is expected.  It’s from this vantage point you will be able to see what cash is available to employ any of the strategies possible to make a difference in your tax planning.           

    FDS Tax Planning and Preparation Services

    Keeping your business books up to date is essential for a timely review before the year ends.  We offer ongoing bookkeeping services using Quickbooks Online.  Our team will reconcile accounts and maintain your books so you have the information you need to make decisions within your business.

    Using the information that stays updated we help you see the impact of various business decisions.  We run projections so you can see the impact of a business decision.  Whether you’re deciding to purchase equipment and see the impact of that depreciation or you’re receiving a large amount of revenue that you need to plan for.

    Reach out to our team to discuss what your business needs are. We’ll provide a quote for the services you’ll need.  

    Strategies We Use

    Every business is so unique in their financial and tax situation.  After reviewing your situation we will suggest various options for what you can do to plan ahead.  If you want to start learning about tax savings strategies, download our guide!

    For some business owners this means developing a plan for when to purchase something in the business while others it’s the timing of when to pay any extra income out to owners or employees.  For businesses who haven’t adopted any type of retirement plan that may be an option that makes sense to utilize excess cash rather than paying higher taxes from the high profits.  

    Other businesses may be looking for ways to cut expenses and taxes so they have more cash to hire or invest back into the business.  You can see one solution doesn’t fit everyone.  

    Tax Planning for Individuals

    Most individuals and families get nervous as tax filing season comes because they just don’t know whether they will owe money or not.  You can take any guess out of this by planning ahead with your tax professional.  Many people receive regular paychecks with commissions or irregular income that can be estimated to get close to what your tax owed will be.  By projecting out this income and the taxes you are having withheld it is possible to see what the refund or amount owed will be.  

    Once we’ve projected these ahead now we can start to plan for the remaining time in each year to make beneficial changes.  There’s no reason to be nervous or left guessing.  Work with a professional who will help you plan ahead!

    Why Is Tax Planning Important for Individuals?

    No one likes to be surprised in a negative way.  It isn’t fun and it isn’t pleasant to find out bad news.  Tax planning is the step to avoiding this.  Planning ahead is important so you don’t find yourself owing money when a small adjustment all year could have made this less painful.  Likewise, there’s no need to be paying more in taxes all year than you need to.  You would want to know the good news earlier that you don’t owe as much as you thought.  Checking in during the year can provide you with the information to plan ahead and make small changes so no one is surprised!

    FDS Tax Planning and Preparation Services

    Our process to get started with this service is simple.  

    1. Provide us with your most recently completed tax return 
    2. We will review it and provide you with a quote. Then, you can decide if you would like to proceed with us preparing your return.  
    3. We will guide you through the tax return process with a checklist and ongoing communication until your return is complete.  

    Your tax preparation fee will be based on the complexity of your return.  Our minimum fee is $500 and increases with complexity.  Examples of items that make a tax return more complex would be items such as rental properties or small businesses.

    For the 2022 tax season (Filing Deadline April 2023) we are no longer accepting new tax clients.  We will update this to reflect any capacity limits for the 2023 tax season.  

    Strategies We Use

    People who enjoy giving to charitable organizations or people that have family goals may find there are some ways they can save.  Likewise, if you are a high income earner you may have multiple benefits available to you. We can see if these can be paired together to minimize your taxes due. 

    Family goals can be paired with tax savings too.  If you’re looking to save toward your kid’s college education there may be state tax savings.  As you save toward your retirement there are tax savings too.  Matching your goals to the potential tax savings available we can help you weigh the benefits of short term tax savings versus longer term tax savings. We bring the confidence to choose the right way to save for you.

    Ready to take the next step?

    Schedule a quick call with our financial advisors.