The process of corporate tax planning involves all of the tax aspects of a business, meaning that not only the tracking of tax liability is done, but strategies and tactics are also considered in the process.
The Process of Corporate Tax Planning
Taxes can be varied and the obligations will come from many different entities. You will have Federal and state income taxes, FICA or social security and medicare tax, property taxes, sales taxes, taxes on properties and many other areas where government like to levy taxes.
Tax management can reduce taxes by careful monitoring and management to be sure that they are not overpaid, and also to be sure that provisions are taken advantage of that offer tax credits and proper deductions when they are offered.
Tax planning strategy
If a Tax Planning Strategies is not implemented, a company can end up paying more taxes than they should, which can hinder the development and the growth of the company from a financial standpoint.
Transactions that generate taxable events occur each and every day in most businesses , so systems have to be developed to keep track of these transactions. There should be mechanisms in place that not only track the taxable events, but to also keep track of the amounts of taxed due from these amounts.
For example, there may be a need for the purchase of additional property for company expansion, but care must be taken to evaluate the tax ramifications of such a purchase. One piece of property may have tax incentives simply due to the zoning regulations in that particular area, whereas the other property may not.
Careful investigation in those areas would uncover these tax incentives, and they should be looked for in all transactions that the company is a part of. This is where a corporate tax planning strategy is vital as far as the ultimate success of improving the bottom line.