Taxes are done, man! No more tax conversations until next year! Or so you thought… As the year progresses, thoughts of taxes fade away. Annual returns are filed, and maybe some handy pre-printed estimate vouchers came with the return to file estimated taxes for next year. Tax time is over, right? Nope. No one LOVES Tax Planning – but it’s necessary to save money, maximize deductions and make the most of your hard work.

We have a saying: Tax Time doesn’t end when you file your tax return. Tax Time is all year long.

Once last year’s tax returns are filed, it is an excellent time to start planning for next year’s taxes.

What is Tax Planning?

You’ve probably heard someone brag about how they saved “beaucoup bucks” on taxes with some crazy convoluted tax scheme… when we talk about tax planning, that’s typically not what we mean.

Defining tax planning isn’t super inspiring and a little yawn-inducing. Simply put, tax planning analyzes a financial situation or plan from a tax perspective to ensure tax efficiency.

No one LOVES Tax Planning - but it's a necessity if you want to save money, maximize deductions and make the most of your hard work.

It gets exciting (at least for us tax and accounting nerds) when we consider the long-term goals for your business and personal finances. Tax strategy ensures you only pay your fair share of taxes owed. No over or underpaying based on numbers carried over from the prior year. It’s fantastic when your business takes off like a rocket, but no one likes to be shocked by a massive unplanned tax bill in April.

An excellent tax consultant will go beyond tax savings to assist in wealth building. Skillful planning requires collaboration between your CPA and financial advisor so business owners can plan for the future.

What Makes Tax Planning Important?

While not the most exciting of topics, tax planning is essential. Why? Let’s hit the highlights:

  • With planning, only the tax owed gets paid, no more, no less. When you overpay your taxes, you give Uncle Sam an interest-free loan. We want to avoid nasty surprises when we underpay, as well. According to the Motley Fool, almost 80% of Americans overpay their taxes with an average refund of over $3,000… that’s $250/month… in your bank account.
  • Gain more control over WHEN taxes are paid. By consulting with your tax advisor, you gain more control over how your tax payments are spread throughout the year. While due dates are mostly set in stone, the amounts paid each quarter are not. How a business is structured, and its revenue ebbs and flows could add flexibility to your estimated payments. For example, estimated payments could be structured for a seasonal business to follow revenue and cash flow based on the busy season.
  • Achieve business and personal goals. Are you planning on buying equipment and considering financing? Have you discussed a defined benefit plan or other retirement plans with your financial advisor? These goals will impact your taxes. Tax laws are complex and change frequently. Often there are benefits (or penalties) people outside the industry are unaware of that can make big goals more appealing and achievable, like enrolling for benefits, saving for retirement, or buying an investment property.

Every business and every individual’s goals and timelines are unique, but everyone has a common thread… Payless, save more, achieve the dream. Tax consultants collaborate with their clients and often with financial planners and lawyers to help create strategies that build wealth over time AND save on taxes.

How to Tax Plan

So how does the magic of Tax Planning happen?

Some days it does feel like magic….

No one LOVES Tax Planning - but it's a necessity if you want to save money, maximize deductions and make the most of your hard work.

The process looks different for everyone, depending on your business’s complexity, personal financials, and goals. However, the process always starts with gathering information. If you’re established, grab your prior year data. Previous year financial statements and tax returns have a ton of information to help predict the current year.

Next, we need to consider all your financial information for the current year to date. O.M.G. I know. That feels overwhelming. The best planning avoids surprises by considering all the moving pieces of your life. So yes. That means your income, income from your spouse’s side hustle, a paystub or two, financial statements, and investment income. Remember that the goal isn’t to prepare a new tax return during tax planning, so estimates are a-okay.

Understanding Your Goals

Now comes the “fun” part. What are your goals? Is anything changing? New kids? Do you expect to triple your income in the third quarter? Retire? Buy/Sell a house? Adding in these changes to your tax planning and financial strategy is where DIY gets complicated and bookkeeping software may or may not have your back. These life changes are an excellent time to talk to your CPA or tax advisor for a robust tax calculation.

Tax Time CPAs offer Advisory Plans for our individual and business clients, including Tax Planning & Strategy. We recommend meeting with a tax consultant in August and November to get the most effective planning. In August, most of the year has passed, so projecting income based on the year’s first half is usually a reliable tactic to estimate the remainder of the year. (Normally anyway… 2020 might be an exception, but that remains to be seen). For our business clients, a second planning meeting in November allows for updates and any course corrections with enough time to enact any time-sensitive strategies before the end of the year. The majority of tax strategy transactions are required to be completed before the end of the tax year.


Tax planning helps individuals and businesses effectively and efficiently plan to pay only the taxes they owe by reviewing their financial status and goals multiple times throughout the year rather than just when their tax returns are due. It’s helpful to employ an expert, like a tax consultant, to ensure that you take advantage of all the beneficial tax strategies and avoid tax pitfalls.

Our Tax Consultants are ready to assist you in developing a tax strategy that helps you reach your financial goals. Contact us today to schedule an appointment!