Every time a new financial year starts, it is essential that the company develops effective financial planning, in order to find tax and accounting strategies to reduce the amount paid with taxes, generate profit for the business, reduce costs and achieve better results. The tax planning with Income tax calculator is a measure used that enables the company to reduce its tax burden by legal means, making it extremely important for allowing the institution to organize and find a way to take advantage of all tax benefits available. We prepared this post for you to understand its importance, losses caused by the lack of good planning and how to do it properly.
Table of Contents
Why is it important to have tax management?
- A well-done tax planning and aligned with business strategies directly impacts the company’s success. Here are the reasons:
- Reduces business costs, without interfering with the quality of the product or service provided;
- Controls cash flow, since tax payments can be made in several ways after receiving a sale;
- Decreases or eliminates unnecessary tax payments;
- Contributes to the appropriate choice of the tax regime;
- Increases the company’s competitiveness in the market;
- Enables the use of tax incentives;
- Reduces the risk of tax assessments, among others.
What are the consequences?
Several problems can happen when neglecting the need to have a tax planning. Below are the main ones.
FINANCIAL LOSS
In view of the complexity of the tax legislation, it is common that the wrong understanding by the person responsible for preparing the tax planning, thus generating a high tax burden. In most cases, the company goes unnoticed that it is paying too much tax, causing a financial loss as a result.
FAILURE OF FINANCIAL MANAGEMENT
One of the main factors that lead companies to failure is poor management. Ineffective planning or the lack of it prevents knowledge and elimination of the risks that permeate the business and prevents the operational assessment of all sectors, costs and expenses considering the facts generated from taxes.
UNCONTROLLED CASH FLOW
When tax planning is not carried out correctly, it is not possible to have predictability on the company’s accounts. Thus, it prevents the adequate projection of cash flow, the creation of a more accurate budget plan and more accurate decision-making.
ABUSE OF LEGAL MECHANISMS
In some cases, the organization abuses loopholes in the law to elaborate “tax planning”. In doing so, although it is often not illegal, the inspection may understand that this planning was abusive in order to deconstruct such operations to collect taxes that were no longer paid. Assemble a team that will be responsible for tax planning. Ideally, it should not only be made up of accountants, but also by other professionals who understand the company’s business and activities.