If you are self-employed and you are making money – you need to consider the obvious benefits of tax planning strategies. It does not matter whether you are a sole proprietor, a partner in a partnership or a shareholder in Corporation. If you are successful in your business venture and have a positive cash flow – you need tax planning. You can also get uk income tax services via https://www.devere-acuma.com/service/tax-planning
Our tax system is a pay-as-you-go system. The taxing authorities expect to receive your estimated tax payments evenly throughout the year on income you are earning.
The purpose for tax planning is to mitigate any taxes due when it is time to file your tax returns. Some strategies to reduce taxes include: reducing your income, increasing your expenses and taking advantage of applicable tax credits.
One of the easiest ways to reduce your income on your individual tax return would be to contribute to a retirement plan. Whether you put the maximum into an IRA, 401k, SEP or other type of retirement plan, these dollars reduce your taxable income and lower your tax bill.
You get to keep more of your money – even though you technically cannot touch it until you are of retirement age. However, there are situations when you can tap into this money and not get penalized –although tax would most likely be due on the distributions.