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  • Become creative at tax return time

  • Over the course of the next two months most businesses will have to file a tax return and most companies delegate this task to their external accountants, which is the way it should be, as it is far too complex to be done by anyone who is not an expert. However, that does not mean that you, as the owner or President of the business, cannot get value for the business out of the process. Remember that the person preparing the tax return is “buried” in a process that is geared to compliance with the legal requirements and it is critical that you ensure that this process includes an opportunity to focus on the future and how anything that can be done is being done to minimize future taxes.

    Remember that income tax legislation has grown from 20 pages in 1917 to over 2,000 pages today and is so complex that many businesses are saving a lot of tax. You are entitled to your share of the opportunities that are waiting for you to discover them. A little bit of focus on the issues often results in substantial savings.

    Ensure that, at least every few years, you ask the person who prepares your business’ tax return(s) to review them in detail with you and to proactively consider how you can save tax in future. Ask about:

      • The corporate organization – is there a way to improve the tax effectiveness in your circumstances;
      • Review your personal/family situation to see if that leads to creative ideas on maximizing tax opportunities;
      • Are there additional allowances that could be available;
      • Are there losses available for future use;
      • Are their accounting practices adopted by the business that could be changed or modified to achieve a better tax position;
      • Review the timing of transactions to maximize any tax benefits sooner;
      • Review the timing and amount of payment of tax installments;
      • Review compensation and benefits policies for yourself, your staff and members of your family;
      • Ask them what they would do if the only consideration was to minimize tax and see how you can work the idea into how you run the business; and
      • Review the key strategies and changes that you will be making in the future – there often are ways to structure the opportunity to be more tax effective.

    Just one creative idea will almost certainly recover much more than the fees for his/her time. If you have never done this or any significant tax planning before, there are likely to be one or more substantial opportunities just waiting to be found.

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