Chad Willardson, the President and Founder of Pacific Capital and Best-Selling Author of Wealth Wired Differently, emphasizes the importance of proactive tax planning to maximize the value of every dollar in a business. Many entrepreneurs struggle with high taxes due to a lack of time or knowledge in handling tax planning. By neglecting strategic planning, business owners may see a significant portion of their earnings subject to high taxes year after year. Willardson encourages adopting a proactive approach to tax planning, viewing the U.S. tax code as a coupon book full of incentives to minimize tax liability.
Many entrepreneurs rely on tax preparers who are reactive rather than strategic partners when it comes to taxes. These preparers simply process information after the fact and inform the business owner of the amount owed. Proactive tax planning, on the other hand, involves identifying legal strategies within the tax code to minimize tax liability. Entrepreneurial success may outgrow the capabilities of original tax professionals, prompting the need to elevate the tax team. Characteristics to look for in a tax team include being forward-looking, up-to-date on tax laws, and strategically minded.
While it may be early in the year, now is the ideal time to start preparing for next year’s taxes by ensuring you have a stellar tax team in place. Collaborate with your tax advisor to audit the structure of your businesses and estate plan to potentially reduce taxable liabilities. Business owners may discover that their current business entity structure is not the most advantageous for their needs, leading to a potential change in structure, such as from an LLC to a C-Corp or S-Corp. Making strategic financial decisions throughout the year with the guidance of a proactive tax partner can help maximize financial well-being and business growth.
As Tax Day has just passed, it’s important to start planning for next year’s taxes by seeking out a tax advisor who proactively seeks solutions and plans ahead strategically. By transforming tax season into an opportunity to maximize financial well-being, business owners can reinvest more into business growth. Ultimately, it’s not just about how much you make, but how much you keep. Willardson’s advice highlights the benefits of proactive tax planning and the importance of having the right tax team in place to support your business and personal financial needs.
