nationaldebtrelief

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Importance of Tax Planning

• While the term tax planning is frequently used,
  it is not necessarily well understood. Heres
  what you need to know.

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What tax planning really means

• Tax planning means deferring and flat out
  avoiding taxes by taking advantage of beneficial
  tax-law provisions, increasing and accelerating
  tax deductions and tax credits, and generally
  making maximum use of all applicable breaks
  available under our beloved Internal Revenue Code.

• Tax planning is the art of arranging your affairs
  in ways that postpone or avoid taxes. By
  employing effective tax planning strategies, you
  can have more money to save and invest or more
  money to spend. Or both. Your choice.

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How are tax planning and financial planning
connected?

• Financial planning is the art of implementing
  strategies that help you reach your financial
  goals, be they short-term or long-term. That
  sounds pretty simple. However, if the actual
  execution was simple, there would be a lot more
  rich folks.

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• Tax planning and financial planning are closely
  linked, because taxes are such a large expense
  item as you go through life. If you become really
  successful, taxes will probably be your single
  biggest expense over the long haul.

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Types of Tax Planning

• There are a few different types of tax planning
  that are useful for individual people, companies
  and organisations. Some of the tax plans include
  short term tax plans, long term tax plans,
  permissive tax plans and purposive tax plans. The
  short term planning allows you to reduce taxes at
  the end of the income year. Long term plans allow
  you to plan at the end of the beginning or end of
  the year,

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How It Works

• When you start tax planning, you can find many
  guides online and you can also speak to financial
  advisors and solicitors to help get you started
  and give you all the important information that
  you will need to know. For example, each person
  has an inheritance tax allowance up to 325,000
  with anything over the threshold being charged at
  40. So, if an estate was valued at 400,000,
  only 75,000 of that would be taxed. Since the
  majority of people wont leave an estate over
  this amount, most feel they dont need to know
  about inheritance tax. However, actively
  considering it and your future can help you to
  avoid any nasty surprises later on.

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Helpful for Businesses

• There are different types of taxes which can be
  hard to keep up with especially if you own a
  business. Tax planning is important for both
  small and large businesses because it can help
  them to achieve their business goals. When you
  have a tax plan as the owner of a business, you
  can lower the amount of taxable income, gain more
  control of when taxes are paid and also reduce
  the rate of tax. Depending on the type of
  business you have, you can find many different
  benefits.

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Methods of Tax Planning

• Short-range Planning. It means that planning
  thought of and executed at the end of the income
  year to reduce taxable income in a legal way.
  Suppose, at the end of the year, an assessee
  finds his taxes have been too high in comparison
  with last year and he tends to reduce it. Now, he
  may do that, to a great extent by making proper
  arrangements to get the maximum tax rebate. It
  does not involve a long-term commitment, yet
  results in substantial savings in tax.
• Long-range Planning. A planning that chalked out
  at the beginning of the income year to be
  followed by the year. This planning will not pay
  off immediately, but likely to help in the long
  run.
• Permissive tax Planning. This is a planning of
  taking advantage of different incentives and tax
  deductions, planning for availing different tax
  concessions.
• Purposive Tax Planning. It means making plans
  with a specific purpose to ensure availability of
  maximum benefits to the assessee through correct
  selection of investments, making a suitable
  programme for replacement of assets, varying
  residential status and diversifying business
  activities and income.

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Contact us

• info_at_cheylesmore.com
• 02476017778
• 6 The Mount
• Chyelesmore, Coventry, CV3 5GU