Tax planning and cost optimization within the legal framework
For as long as ever, individuals and business always wanted to make the most out of their tax fee as possible. Tax is an expense, and of course this fee will reduce the amount of money you currently have. So, what can I do to be efficient with my money? Tax planning is your solution. If you wonder what tax planning is, as well as how to optimize costs within the framework of the law, let’s follow the article below and you will understand!
1. What is tax planning?
Tax planning is an overarching, strategic task that helps to understand and evaluate all tax issues before reporting. Tax planning is different from tax evasion or avoidance, as it has a more important and broader meaning – carries the strategy of the whole business, affects the development of the business in the future.
2. The necessity of a tax plan for businesses
The first thing to understand is tax planning is an important concern that arises and varies at different times for different businesses, and businesses with subsidiaries operating in different countries.
As leaders need to have a good understanding of tax policies to achieve good business results, the importance of understanding Tax Law, Tax Administration Law and how to comply with them allows managers to make better business decisions and increase their work efficiency. Managers can recognize the problem precisely when it arises or directly from the tax consultant.
Taxes affect the development of the business as well as the cash flow. Furthermore, corporate income tax, personal income tax, social insurance contributions, sales and other taxes are all additional numbers subjected to be regulated. All of the above shows that tax is not only an obligatory payment, but also one that must be paid quickly and on time.
So how can you optimize the tax cost of each business? Have you chosen for your business an optimal and highly effective method?
3. Tax evasion and tax reduction is not advisable
Tax evasion is the practice of methods that are highly inadvisable by law to reduce the amount of tax needed to be pay. Usually done in two ways: Hiding information that should have been provided to government agencies or creating bogus information.
Mitigation can lead to reduction in tax payable, but its consequences may be an increase in other costs or a decrease in income.
The fact that businesses apply a tax plan to optimize tax costs, this means that the tax reduction is relative to the reduction of income or the increase of other costs.
To do this job well, it requires tax planners to have a clear vision as well as understand the overall picture between business and different type of taxes currently, in order to optimize costs for businesses as much as possible.
4. How to optimize costs within the legal framework
There are many ways to optimize tax costs for businesses, among them are to control revenue as well as costs. The key takeaway is how to be both reasonable to your needs as well as ensure you stay under the principles and provisions of the law. Some types of expenses that businesses often operate that you should refer to:
– Implement promotions, discounts, etc.
– Reduced selling price with defective goods, inventory, …
– Cost of wages and salaries: This is a deductible expense that many businesses use to contribute to tax optimization.
– Depreciation costs of fixed assets: This will contribute to a significant increase in valid costs for the business.
– Do not choose a depreciation period shorter than the specified time, because if the depreciation is shorter than the specified period, this depreciation expense will not be counted as a valid expense for the business.
– Implement discounts when buying in bulk
5. A few things to keep in mind for effective tax planning
Businesses should pay attention to the following issues when planning tax:
– Master and know how to apply the Government’s tax regulations in each specific case to optimize costs.
– It is necessary to know the entities that are not taxable as well as taxable in the business as well as the specific tax rates to be able to calculate the payable tax amount, and make effective and accurate accounting.
– Each business needs to monitor as well as update appropriate supplemental rules as well as correct them in the most appropriate way to pay taxes in full.
– Know whether or not your business is eligible for preferential policies, tax exemption or reduction.
– Your people should be the core value – Improve and train your accounting staff.
6. Why should you hire a consulting service to optimize tax costs?
Currently, when the majority of accountants at the company often do not have enough tax expertise, they will cause many risks as follows:
– The employees have not kept themself updated with the changes of tax law as well as delayed paying wrong taxes, affecting the company.
– Not having enough understanding to point out the errors if the tax authorities make a mistake.
– Incurring tax expenses that are not in the plan, disagreeing with the tax authority, very likely to be considered a violation of the tax law.
– Not getting into the habit of tax planning, leading to overpaying or wasting money on unnecessary taxes.
When hiring a tax optimization service, you will be advised by us to plan to optimize your tax in the most effective way.
7. Reasons to choose our tax optimization planning service
When you come to us, you will be consulted accurately and promptly, with procedures being covered swiftly and conveniently for individuals and businesses:
– Make a plan to thoroughly optimize taxes
– Minimize errors and save costs in tax declaration, avoid penalties;
– Discover opportunities to maximize tax costs
– Advice on ways to improve the tax compliance system;
– Equip the necessary information to protect the business before the tax authorities.
As everyone knows, tax planning helps the company keep track of their performance while saving time in the process of viewing the reports, in turn helping the accounting department to be more proactive in the work and achieve previously set goals much easier. You won’t have to wait a whole year for your final settlement, just opening your tax plan can get it resolved and see the full picture easily. This will help businesses save costs while complying with the law, limit tax violations, and have more time to focus on other important matters.
Through the above article, have you understood the importance of tax planning? The optimization of tax costs must be based on the principle of increasing deductible expenses and reducing revenue, along with a tax plan that closely follows the current situation of the enterprise.
Hopefully, the sharing through the above article will help you get important suggestions to optimize tax costs for businesses.