For many business owners, the tax analyst is the person who comes in at the end of the year and tells them how much money they owe (or are getting back). But there’s so much more to this important role! Tax analysts are responsible for reviewing tax liability. Also, tax practices for a company, ensuring compliance with tax codes, and identifying opportunities for tax savings. In other words, they’re an essential part of keeping your business on the right side of the law. While saving you money. So, do you know who your tax analyst is?
The Importance of a Tax Analyst
A good tax analyst will have a thorough knowledge of federal, state and local tax laws and codes. They will use this knowledge to help prepare company tax filings, monitor compliance with tax codes, and identify opportunities for tax savings. In short, they play a vital role in ensuring that your business is operating within the bounds of the law and taking advantage of all available opportunities to save money. Also, a tax analyst can be a valuable resource when it comes to tax planning for your business. They can help you make strategic decisions about how to allocate your resources in order to minimize your tax liability and maximize your savings.
What Does a Tax Analyst Do?
A tax analyst’s specific duties will vary from company to company, but there are some commonalities. Typically, a tax analyst will:
-Review financial statements to identify taxation opportunities and risks
-Coordinate with other departments (such as accounting or legal) to ensure compliance with relevant laws
-Prepare documents for submission to regulatory authorities
-Assist with audits by providing documentation or answering questions
-Analyze changes in taxation laws and regulations to identify potential impacts on the company
-Make recommendations on strategies to minimize taxation liabilities
-Assist with the preparation of annual tax returns
-Maintain current knowledge of taxation developments through continued education or professional development activities.
When choosing a tax analyst, it’s important to select someone who has the necessary skills and knowledge to meet your needs. Ideally, you should choose someone who is:
–Licensed and certified: Look for someone who is licensed by the IRS as a Certified Public Accountant (CPA) or enrolled agent. This designation ensures that they have the necessary education and experience to provide quality tax services.
-Experienced: Choose someone with extensive experience working with businesses of all sizes. They should be familiar with the ins and outs of corporate tax law and have a proven track record of helping businesses save money on their taxes.
-Knowledgeable: Look for someone who is up to date on the latest changes in tax law. This will ensure that they are able to provide you with the most accurate and helpful advice possible.
The Bottom Line
Tax analysts play a vital role in ensuring that businesses are operating within the bounds of the law and taking advantage of all available opportunities to save money. If you don’t already have a trusted tax analyst on staff, now is the time to find one. Here at Startup Tandem, we offer services of the highest quality, with CPAs and tax analysts that will exceed your expectations. Visit us today to learn more about how we can help you save money on your taxes!
We hope this article was helpful in giving you a better understanding of the role of a tax analyst and why they are so important to businesses. If you have any questions or would like to learn more about our services, please don’t hesitate to contact us. We would be happy to discuss your specific needs and see how we can help you save money on your taxes!
As a business manager, you have a lot on your plate. You need to make sure that your company is running smoothly, and that means overseeing everything from finance to marketing. But one aspect of your job that you can’t afford to neglect is tax planning. Here are four features of tax planning that you should be aware of:
1. Reduction in Tax Liability
One of the most important features of tax planning is to reduce tax liability. This can be done in a number of ways, such as investing in certain types of businesses or taking advantage of deductions and credits. By reducing your taxable income, you’ll end up owing less in taxes overall.
Tax Deferral
Another key feature of tax planning is deferring taxes. This means postponing the payment of taxes on certain income until a later date. This can be beneficial if you expect to be in a lower tax bracket in the future, as you’ll end up paying less in taxes overall.
Tax-Free Income
Another way to reduce your tax liability is by earning income that is not subject to taxation. This includes items such as gifts and inheritances. While this income may be taxable in other scenarios, it can provide some relief when it comes to your business taxes.
Use of Tax Shelters
Another way to reduce your tax liability is by using tax shelters. These are investment vehicles that can help you shield some of your income from taxation. There are a number of different types of tax shelters, so it’s important to consult with a tax professional to see if one is right for you.
2. Advance Planning
Another key feature of tax planning is that it’s best to do it in advance. That means taking a proactive, rather than reactive, approach to your taxes. For instance, if you know you’re going to have a large capital gain from the sale of a property, you may want to consider deferring the gain into another year so that you’re not taxed at a higher rate. Doing your tax planning ahead of time will allow you to make the best decisions for your business—and your bottom line. Also, by staying on top of your tax planning, you can avoid any last-minute surprises that could come up.
Review of Tax Returns
Another key feature of tax planning is that you should always review your tax returns before filing them. This way, you can ensure that everything is accurate and that you’re taking advantage of all the deductions and credits you’re entitled to. If you find any errors, you can correct them before they cause any problems down the road.
While you may be able to do your own tax planning, it’s often best to consult with a tax professional. They can help you understand the complex tax laws and regulations and identify any areas where you may be able to save. They can also help you with more complex tax planning strategies, such as deferring taxes or using tax shelters.
Keeping Up With Tax Changes
Finally, another key feature of tax planning is staying up-to-date on tax changes. The tax code is always changing, so it’s important to stay on top of the latest developments. This way, you can ensure that you
3. Investment in the Right Direction
A good tax plan will also involve making investments in the right direction—namely, investments that will lower your taxable income. This could include things like investing in energy-efficient equipment or real estate located in enterprise zones. By making smart investments, you can save money on taxes now and down the road. Other smart investments include making super contributions, health insurance and negatively geared property.
4. Dynamic in Nature
Finally, it’s important to choose a tax plan that is dynamic in nature. That means it should be able to adapt as your business grows and changes over time. As your business expands, so too should your tax plan—otherwise, you could end up paying more than you need to in taxes.
A good tax plan is an important tool for any business manager. By keeping these four features in mind, you can ensure that your business is getting the most out of its tax dollars—and keeps more money in its pocket come tax time.
Tax planning is an important aspect of any business manager’s job. By knowing the four features of tax planning, you can make sure that your company is making the most advantageous decisions when it comes to its taxes. This includes reducing tax liability, deferring taxes, earning tax-free income, and investing in the right direction. Additionally, it’s important to have a dynamic tax plan that can adapt as your business grows and changes over time. By keeping these things in mind, you’ll be well on your way to effective tax planning for your business. If you need any help, here at startup Tandem we have a team of experts who can assist you. Simply book a free consultation today.
While tax planning has many advantages, there are also some disadvantages as well as limitations to consider. As with anything, there are always two sides to every story. Here are some potential drawbacks and limitations of using accrual basis accounting for tax purposes.
Ease of use
1. It’s more complex. The accrual basis is more complicated than the cash basis and requires more knowledge to correctly implement. This complexity can lead to errors being made, which can in turn lead to costly penalties from the IRS. Also, because the accrual basis relies on estimates, there is always the potential for those estimates to be off, which can again lead to problems come tax time.
2. It’s less intuitive. The accrual basis can be more difficult to understand and follow than the cash basis. This lack of intuition can make it harder to spot errors, as well as make it more difficult to explain your taxes to others (such as your accountant).
Time-related difficulties
3. It can delay the recognition of income. Because the accrual basis allows you to defer recognition of income until it is earned, this can create a situation where you end up owing taxes on income that you haven’t even received yet. This can obviously create cash flow issues and cause problems come tax time. As an example, let’s say you sell a product on credit and don’t receive payment until 60 days later. Under the accrual basis, you would have to pay taxes on the income from that sale even though you haven’t received the money yet.
4. It can accelerate the recognition of expenses. The flip side of the previous point is that the accrual basis can also accelerate the recognition of expenses. This means you may have to pay taxes on expenses that you haven’t actually incurred yet. Again, this can cause cash flow issues and make it difficult to budget for your taxes.
5. It requires good record-keeping. In order to properly use the accrual basis for tax purposes, you need to have good records. This means tracking all income and expenses very carefully and making sure everything is recorded correctly. This can be a lot of work, especially for businesses with a lot of transactions. If you are struggling with keeping good records, seek out the help of a professional.
While there are some potential drawbacks to using the accrual basis for tax purposes, there are also many advantages. When used correctly, the accrual basis can provide a more accurate picture of your business’s financial health and can save you money come tax time. As with anything, it’s important to weigh the pros and cons before making a decision. Talk to your accountant or tax advisor to see if the accrual basis is right for you.
Situation based difficulties
6. It may not be favorable for businesses with few receivables and large current liabilities. While the accrual basis may yield favorable tax results for businesses with large receivables and few current liabilities, the reverse is true for businesses with few receivables and large current liabilities. In this case, it may be better to use the cash basis for tax purposes.
7. It can be difficult to change from a cash basis. If you’ve been using the cash basis for tax purposes and decide you want to switch to the accrual basis, it can be difficult to make the change. This is because you will need to go back and track all of your income and expenses for the previous year (or years) in order to correctly file your taxes. This can obviously be a lot of work, so it’s important to weigh the pros and cons before making a decision. Talk to your accountant or tax advisor to see if switching to the accrual basis is right for you.
What about the advantages of cash-based accounting you ask? In short;
1. It is easier to understand and follow. The cash basis is much simpler than the accrual basis and is therefore easier to understand and follow. This can make it easier to spot errors, as well as make it easier to explain your taxes to others (such as your accountant).
2. It provides a more accurate picture of your business’s cash flow. Because the cash basis only recognizes income and expenses when money actually changes hands, it provides a more accurate picture of your business’s actual cash flow. This can be helpful in spotting trends and making decisions about how to allocate resources.
3. It may be favorable for businesses with large receivables and few current liabilities. Because the cash basis only recognizes income when it is actually received, it can be favorable for businesses with large receivables and few current liabilities. This is because you can defer recognition of income until it is actually received, which can lower your taxes.
There you have it. The cash basis and accrual basis are the two most common methods of accounting, each with its own advantages and disadvantages. It’s important to weigh the pros and cons before deciding which method is right for you. Talk to your accountant or tax advisor to get their professional opinion.
Do you need more information? Contact us today and we can help you figure out the best way to account for your taxes.
As a business owner, you know that taxes are a fact of life. But just because taxes are inevitable doesn’t mean that you can’t take steps to minimize your tax bill. By incorporating some good tax planning strategies into your business plan, you can save yourself a lot of money come tax time. Here are a few common tax planning strategies that all businesses can consider.
Utilize Depreciation.
One way to save on taxes is to take advantage of depreciation deductions. Depreciation is an accounting method that allows businesses to deduct the costs of certain properties and equipment over time. Depreciation deductions are taken over the useful life of an asset, which means significant tax savings in the long run.
Section 199A and the 20% Pass-Through Deduction.
The new Tax Cuts and Jobs Act created a 20% pass-through deduction for qualified business income from pass-through entities. Such entities include sole proprietorships, partnerships, LLCs, and S corporations. This deduction is available to businesses with taxable income below $315,000 for married couples filing jointly. Similarly, $157,500 for all other taxpayers.
Timing Considerations.
Another important consideration when it comes to taxes is timing. By timing your income and deductions strategically, you can lower your overall tax bill. For example, if you know you’re going to have a large expense in the upcoming year, you might wait to incur those expenses until after Jan. 1. Doing so, they can be deducted from your next year’s taxes.
Accounting Method Planning.
The accounting method you use can also have an impact on your taxes. If you use the accrual method of accounting, you can deduct expenses as soon as they’re incurred. Even if you don’t actually pay for them until later. On the other hand, if you use the cash method of accounting, you can only deduct expenses when they’re actually paid for.
Utilize Charitable Contributions.
Making charitable contributions is a great way to reduce your tax bill while also supporting causes that are important to you. Though, it’s important to keep good records so you can document your donations come tax time.
Pass-through Entity Taxes.
If your business is a pass-through entity you’ll need to be aware of the new pass-through tax deduction. This deduction was created by the Tax Cuts and Jobs Act. The main feature is that it allows business owners who qualify to deduct up to 20% of their qualified business income on their personal tax returns. In order to qualify for this deduction, though, businesses must meet certain requirements regarding their income levels and types of business activity.
So it’s important to consult with your accountant or tax attorney before assuming that you’ll be able to take advantage of this deduction. It’s also worth noting that the pass-through deduction is set to expire at the end of 2025. So it may only be available for a few more years. Therefore, if you think you may benefit from the pass-through deduction in the future, it may be advisable to act sooner rather than later. For more information about how the pass-through deduction works, check outthis article.
These are just a few of the many tax planning strategies that business owners can use to lower their overall tax bills. By taking advantage of depreciation deductions, strategic timing, and pass-through entity taxes, you can save yourself a lot of money come tax time. However, it’s important to consult with your accountant or tax attorney before implementing any major changes to your taxation strategy. As they will be able to advise you on which approach will work best for your individual situation. As Startup Tandem, we have a team of experts that may guide you through this process.Visit our website to learn more about how we can help you with your taxes.
From mom-and-pop shops to tech startups, small businesses are the backbone of the American economy. But what exactly qualifies as a “small business?”. When it comes to taxes, the answer isn’t always so clear. The good news is, we’re here to help clear things up. Read on to learn more about determining small business status for tax purposes in the United States.
Classification for Tax Purposes
The first thing to know is that there is no one-size-fits-all answer when it comes to classifying a business as small for tax purposes. That’s because the definition of a small business can vary depending on which tax code is being used.
For example, the Small Business Administration (SBA) defines a small business as “a firm that is independently owned and operated, is organized for profit, and is not dominant in its field.”
A business must fall below at least one of the SBA’s size thresholds in order to be considered small.
In general, these size standards are based on either the average annual receipts or the number of employees for a particular industry. For example, the size standard for businesses classified under NAICS code 541110 (Offices of Lawyers) is $7.5 million in annual receipts. This means that any business with annual receipts of $7.5 million or less is considered small for tax purposes in the United States.
However, the IRS has a different definition for small businesses that qualify for certain tax breaks. Under the IRS code, a small business is any business with less than $5 million in annual receipts.
So, what’s the magic number?
Unfortunately, there is no easy answer. The best way to determine whether your business qualifies as small for tax purposes is to consult with a tax professional or use the IRS’s Small Business Tax Center.
When it comes to taxes, there is no such thing as a one-size-fits-all solution. But with a little bit of research, you can figure out which category your business falls into. And once you know that, you can take advantage of all the tax benefits that come with being a small business owner in the United States!
There are a few other things to keep in mind when determining if your business is small for tax purposes. First, businesses can be small even if they do not have the organization of traditional corporations or partnerships. This includes sole proprietorships, limited liability companies (LLCs), and S corporations.
Second, businesses can be considered small even if they’re part of a larger organization. For example, let’s say your company has 500 employees. Only 20 work at the location where you provide your product or service. In this case, you would still be a small business for tax purposes because fewer than 500 employees work at your particular location.
Of course, this begs the question:
What if my business doesn’t fit neatly into either of these definitions?
Don’t worry, there’s still hope. The SBA offers a size standards tool that can help you determine whether your business qualifies as small based on its industry. Simply select your industry from the drop-down menu and enter your average number of employees or annual receipts (whichever is applicable). The tool will then let you know whether your business qualifies as small according to SBA standards. As an alternative, seek professional help.
Figuring out whether your business qualifies as small for tax purposes can be complicated. But don’t despair—the SBA’s size standards tool can help you get to the bottom of it. Once you know how your business stacks up, you can move forward. You will have confidence knowing that you’re taking advantage of all the tax breaks and incentives available to small businesses in the United States. If you still feel like you need additional information, our team of experts at Startup Tandem would be more than happy to help. Contact us today to learn more.
