Tax Planning is an exercise wherein a business takes maximum benefits of tax law, exemptions and other benefits announced by the government to reduce tax liability of business. This involves planning with respect to location, employee, capital and debt mix etc. Whereas tax management refers to timely compliance of taxes which includes tax payment, tax return on time. As appropriate periodical reviews of your tax situation ensures advanced planning for the next year, relying upon a professional who understands the legal requirements as well as the needs of your business is a wise decision.
Significant Aspects of Tax Planning and ManagementSelection of place of business plays a significant role in tax planning in view of state specific tax rates, tax exemption in different states like that of north east etc.
Specific Management decision with respect to employee remuneration helps in reducing tax payment on the part of organization as well as that of employees.
The decisions to buy or hire also plays a vital role in reducing taxes, as the buy decision will benefit organisation with depreciation which is normally higher than the rates prescribed in companies act 2013.
A proper check on the activities of an organization’s sales persons who often travel to different states ensures that the organization is filing all state corporate tax returns as needed.
Making up the shortfall by increasing withholding on an organization’s salaries or bonuses helps in avoiding the danger of an underpayment penalty.
Documentation of the business activities in an organization is significant not only from the perspective of tax estimation but also from the perspective of ensuring the systematic maintenance of all records in the form of appointment books, emails and narrative summaries.
