Tax planning is a method of arranging your expenditure in a way that you can maximise the tax breaks allowable to you and in turn continue to thrive. The main reason such tax breaks are allowed – and it is worth noting that different countries will have very different rules on how you can present your tax – is that, without them, smaller companies may end up crippled by the taxes they face.
The way in which the taxes are planned will vary from company to company, and one of the easiest ways to get a better understanding is by talking to companies versed in the laws that govern such things. Businesses will also have completely different ways of approaching tax planning than individuals will, but ultimately the overall aim is to ensure that as much expenditure as possible becomes tax deductable.
For companies there are other ways of improving tax rates too, including considering offshore company formation. For many, the word ‘offshore’ conjures up images of shady dealings or nefarious goings on, but in reality offshore company formation is a perfectly legal way to help you get the best tax benefits around.
Simply knowing your full entitlement, whether you are based in the UK or abroad, will help you to understand exactly what can be written off against tax and what can’t be. You may also find that reducing income in certain ways will help you be less accountable for tax come the end of the financial year.
Ultimately, being able to make the most of the tax laws available to you is all about having help from the people in the know. Whilst a consultancy fee may cost you money, the amount they will undoubtedly be able to save you through their knowledge of taxation laws will almost certainly in turn not only cover the cost, but give you far more savings on top whilst also ensuring you are completely compliant with the relevant tax laws.