Phronesis Group Consulting Tax Planning
Tax planning is the analysis of a financial situation or plan to ensure that all elements work together to allow you to pay the lowest taxes possible. Considerations of tax planning include the timing of income, size, the timing of purchases, and planning for expenditures. Effective tax planning can help reduce your tax burden and improve your tax efficiency. Related benefits include offsetting future healthcare costs with HSA contributions or providing for your retirement with IRA contributions. A strong tax planning strategy can also free up more money for you to invest, save, or spend how you please. Tax planning is the development of a strategy for minimizing or delaying an entity's tax burden within the structure of its financial and operational plans. The result can be a reduction in the effective tax rate paid, leaving more cash for other purposes.
Tax planning is a pivotal part of financial planning. Through effective tax planning all elements of the financial plan falls in place in the most efficient manner. This results in channelization of taxable income to different investment avenues thus relieving the individual of tax liability. The investment amount post lock-in can be utilized for fulfilling needs and act as the retirement corpus in most cases. All in all, the objective of tax planning is to reduce tax liability and attain economic stability. The CFO is responsible for managing the financial actions of the company. Their duties include tracking cash flow, analyzing strengths and weaknesses to propose corrective action plans when necessary and preparing accurate forecasts so that management can make informed decisions about future investments or cuts.
Purposive tax planning:
Planning taxes with a particular objective in mind
Permissive tax planning:
Tax planning that is under the framework of law
Long range and Short range tax planning:
Planning done at the start and end of a fiscal year respectively