Filing one’s taxes is a task that many find daunting and confusing. Many are unaware of tax reform and don’t know of the best tax planning strategies. In fact, many aren’t even aware of annual changes in tax code and systems and thus fail to adopt a planning strategy unique to each year.
The tax system applicable to you depends on your place of residence, income, type of employment/company, and age. Paying attention to the various tax brackets applicable to you as well as tax reform introduced that year will help you with tax returns and planning. In addition to this, you can also seek the services of accounting and tax professionals, for instance, FinAccDirect.
If you are planning your tax strategies for 2019, whether you are a company outsourcing for accountants UK or a small business or startup struggling with tax returns and planning, these are the best strategies for the year.
Purpose of Tax Planning
There are three main purposes of tax planning; reducing income, increasing deductions, and utilization of lower tax rates. Understanding the purpose of tax planning will change your perspective of strategies and the importance of implementing them. Instead of planning your tax strategies for 2019 just because it feels like a compulsory task, understand its benefits and plan accordingly.
Review your strategies and ensure they meet the main purposes of tax planning. If you find that your tax planning strategies do not achieve any of these purposes, accounting and tax professionals will be able to help you. Companies like FinAccDirect not only provide tax returns and planning services, but also financial statement reporting and outsourcing for accountants UK. These services may also benefit you in addition to tax planning.
Keep Yourself Updated
One of the most important tax planning strategies of any year is being aware of the latest tax reforms and codes. When tax reforms are introduced, pay attention to the tax brackets you fall within. As mentioned previously, your age, income, area of residence and type of employment are all factors that should be taken into consideration.
Tax concessions or deductions depend on these factors and your tax planning strategies for 2019 should take full advantage of these. For instance, there are many concessions made for small businesses and startups. If you plan accordingly, you can benefit from them.
Review Your Bad Debts
You may have debts that can’t be recovered and these bad debts should be reviewed and written off. By doing so, you will be entitled to a tax deduction in the year you write off your bad debts. This is a relatively simple task and should be done on a regular basis.
Accounting and tax professionals like FinAccDirect provide services that cover reviewing and writing off bad debts, but you need to make absolutely sure that there is no prospect of the debt being paid. If it is later recovered, it has to be included as an assessable or taxable income.
Another tax planning strategy to implement in 2019 is to review your inventory at the end of the year. Many businesses fail to do this, but there could be damaged or obsolete items which have lowered in value but are valued in full. Be revaluing such items, you can benefit from tax deductions.
Timing Matters
There could be work started at the end of a financial year and completed in the next, and you may issue interim invoices, where the payment for a large project is broken down into multiple payments as certain portions of the project are completed.
However, the timing of these invoices, especially if they change which financial year the income is assessed in, can be a crucial tax planning strategy that you will want to pay attention to. If you aren’t completely sure about the ideal way to issue receipts, you can look at outsourcing for accountants UK, where companies like FinAccDirect offer a range of services from payroll and bookkeeping to financial statement reporting and corporate tax and self-assessment registration.
By planning ahead, you can benefit from tax reforms, so don’t wait until the last minute, put together your tax planning strategy for 2019 today.