What Makes Tax Planning Services Different From Tax Preparation

Most people are aware they can save money on their tax bill. However, they also think they need to hire a tax accountant to prepare their tax forms. 

While this will certainly help you save a noticeable amount of cash, you can make additional savings by leveraging tax planning services. 

As such both tax planning and preparation are a good way to set up an effective financial planning strategy. 

Let’s see how tax planning services differ from tax preparation and explain why you should consider hiring a financial planning lawyer.

What is Tax Preparation?

Tax preparers inform taxpayers about the tax deductions and credits they can leverage while completing and filing their tax forms during the tax season. In addition, it also ensures that you comply with federal and state laws. 

Generally speaking, most people use tax preparation services annually and it only involves a few exchanges between yourself and the professional you hired.

What are Tax Planning Services?

Tax planning services can help maximize your tax savings. It’s an ongoing process that accounts for everything from current financial situation, and past filings, to future fiscal goals. Furthermore, it also takes into account your annual tax activity. 

Even though tax preparation requires only a few communications between you and the tax professional, with tax planning services you’ll have to stay in constant contact with the financial planning lawyer. This is necessary because your business or personal situation and the applicable laws may vary throughout the year.

In other words, it’s a long-term process that helps set up immediate plans and unlock long-term financial benefits. 

What Credentials Are Required For Tax Planners And Preparers

If you’re considering hiring these experts, it’s necessary to know which credentials are required in addition to those that can help you achieve more value for your money. 

For tax preparers, it’s necessary to find someone with a preparer tax identification number. This is akin to a license that allows individuals to prepare tax returns in exchange for a fee. Keep in mind that there are generally no other credentials aside from those specific to certain states that require a specialized credential to prepare taxes on the territory of the particular state. 

Furthermore, if they’re to represent you in front of the IRS including audits and appeals, they need to be a certified accountant, an enrolled agent, or an attorney.

With tax planning it’s different. While this field requires much more expertise, there are generally no requirements for tax planners. Still, keep in mind that their effectiveness will depend on the knowledge of your business and industry and its specific situation.

Benefits Of Tax Planning Services

There are plenty of advantages to hiring a financial planning attorney, including:

1. Reduced tax liability

The most significant advantage of hiring a tax planner is that it drastically reduces not only income tax liability, but also helps control capital gains tax and any other applicable taxes on investments, assets, or savings. 

2. Fewer taxes for your beneficiaries

By taking advantage of various investment options, you may also be able to reduce your tax liability while minimizing it for your beneficiaries. For instance, a tax planner can allow you to leverage assurance bonds for estate planning purposes. 

In addition, they can help you limit tax and also grow your investments during your lifetime. 

3. Flexibility

Financial and tax planning will also make things easier for your family after you pass away as there are investment arrangements that provide you with more tax flexibility. 

4. Enhance cash flow

Tax planning services can also optimize the cash flow if you’re a business owner. For example, a financial planning lawyer can manage the timing of your income recognition or leverage the right expense deduction to allow your business to align your obligations to your business’s cash flow. 

5. Minimize risk and ensure compliance

By paying more attention to tax planning you can circumvent any tax risk and at the same time ensure your business stays compliant with relevant federal and state tax regulations. 

Tax planning experts can stay on top of any new developments, allowing your organization to identify any risks that may suddenly appear, avoid paying penalties, and staying in compliance with all new IRS rules. 

Keep Your Tax Situation In Check

Regardless of whether you need someone to prepare your tax returns and make sure they’re as accurate and as timely as can be, or you need a long-term strategy, you will without a doubt benefit from both services.

Plenty of individuals and businesses land in hot water because of simple oversights and other issues such as missing deadlines. As such, having a tax professional on hand is the best way to eliminate the hassle of dealing with taxes and provide yourself with some necessary peace of mind. 

But, if you’re looking to achieve more substantial savings while keeping your assets and property protected in the long term, tax planning services are worth the investment. 

This is especially important for businesses. Because so much of your business success depends on increasing your bottom line, minimizing your tax liability and penalties can be the key to controlling your expenses and boosting your upward mobility. 

If you’re looking for a financial planning lawyer, you should reach out to Doane & Doane. 

As one of the most reliable tax and estate planning law firms in Florida, we have the expertise and the resources to manage your tax situation effectively and maximize your savings. We’ll closely evaluate your past returns, and analyze historic tax data, in addition to accounting for your future goals. 

Our attorneys will do more than just keep you compliant, we’ll also help achieve the full possible amount of tax benefits using all available legal means - all that at a price you can afford.

If you have any questions or would like to set up an appointment, feel free to call 561-656-0200 or fill out our contact form.

Note: 

The information in this blog post is for reference only and not legal advice. As such, you should not make legal decisions based on the information in this blog post. Moreover, there is no lawyer-client relationship resulting from this blog post, nor should any such relationship be implied. If you need legal counsel, please consult a lawyer licensed to practice in your jurisdiction.