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Tax Planning vs Tax Preparation: What's the Difference?
Manage episode 347071637 series 3394067
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Do you know the difference between tax planning and tax preparation? If you're like most people, you probably think they're the same thing. But in reality, they're very different. And when you combine the two, that's how you can maximize your personal and business income investments even after you pay your taxes. So, what is tax planning? Tax planning is creating a strategy to minimize your tax liability. Legally, we execute strategies and minimize your tax burden. And this is actually a year-round process. It's not something you do right before your tax return is due.
When you work with a tax planner, they consider current laws, new laws and regulations, and your current situation. The aim is to prepare you for the lowest tax liability possible, while still keeping you within the current tax regulations. For business owners, tax planning is especially important. We have to not only look at where you are today, but where you will be in five years. That's because oftentimes, when you elect to be in a certain entity type with the IRS, you can't switch out of it for 60 months.
So, what are some benefits of tax planning and tax preparation? Listen in to find out!
Here are some steps you need to follow to lower your tax liability, save, and save time:
1. Tax planning is creating a strategy to minimize your tax liability.
2. Tax preparation is preparing your tax return for filing by the tax deadline.
3. Filing your tax return and ensuring adherence to federal and state law.
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About Jayden
Jayden was not always the financial guru that he is today. Growing up in a household just shy of the federal poverty line in Prince George’s County, Maryland, he knew the importance of money management but didn’t have the tools to create the financial stability he so desperately craved. After graduating Towson University with a B.S in Accounting and incurring a large amount of debt, Jayden was determined to make a change.
With a little hard work, and A LOT of sacrifice, Jayden became independent, gained professional growth as an accountant at a small CPA firm in Atlanta, and became a Certified Public Accountant. Over the next years, he’s worked with clients in just about every industry — helping them not only expand their financial portfolios, but to create plans that ensure financial sustainability and minimize taxability.
As a CPA, Jayden’s goal is to help entrepreneurs like himself gain independence and create a unique action plan to bring more to their bottom line while paying less in taxes. Invest in yourself and start working with Jayden TODAY!
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