Tax Planning

Tax planning: paving the way in which for extra engagement

THERE are two things we cannot avoid on this earth: death and taxes. One area where audit firms can assist non-audit clients is with tax planning. There are many finance and accounting outsourcing companies or even accounting firms that deal with tax preparations. When you can combine the two, you create longer engagements with clients.

Tax planning can also open up opportunities for other services such as retirement, financial and investment planning. All of this has tax implications as well, so tax planning can pave the way for these additional services.

An April 2021 Arizent survey found that the top four services most frequently provided are tax planning (98 percent), business planning (88 percent), retirement planning (84 percent), and investment planning (79 percent).

However, not many firms or consultancies really have the time to do tax planning. These law firms or even outsourcing firms are so busy with tax preparations for non-audit clients that they hardly have time to perform other services. In the Arizent survey, more than a third, or 36 percent, of respondents said they do not provide such services directly to customers because of the time-consuming training of employees.

What is tax planning and what does it involve? There are so many definitions, but the easiest to understand comes from Tax planning is a central part of financial planning. It helps analyze where a company can legally maximize tax savings and mitigate tax burdens while remaining compliant with tax laws and regulations.

In the Arizent survey, respondents indicated that planning could be the start of a one-stop shop, ranging from retirement planning (63 percent), business planning (46 percent), asset allocation (22 percent) to… Cash and debt management (32 percent). Other.

However, not many clients in the Philippines see the benefits of tax planning and there are not many accountants available to offer such services. The latter think (like me) that this can take a long time and that the lack of staff who can perform this function is also a concern. This means that a lot of training is required to help staff develop expertise in this area.

However, the potential is huge and can feed into other services. The added benefit is that you can maintain customer loyalty and develop the expertise of a company’s employees. With so many BIR regulations and tax updates, having concrete and appropriate tax planning available at the beginning of the year or even before can save clients a lot of headache and potentially tax savings.

However, if you conduct a tax audit for a customer, you cannot conduct tax planning for that customer. Still, there’s a lot of potential for the service, because big or small, businesses and individuals all need tax planning.

Tax planning involves three basic methods: using tax avoidance (which is a legal means of minimizing the tax burden) and tax credits, and maximizing allowable deductions and minimizing taxable income in a legal way. These are basic, but there could be more complex methods, such as B. how to protect an appreciable asset from inheritance tax or plan ahead whether to donate real estate to heirs or whether it will be subject to inheritance tax if the owner dies.

Not many taxpayers realize the benefits of tax planning – that’s why few take advantage of the benefits when they should. Through tax planning, they may minimize their tax burden not only for the current tax or calendar year, but also for the future. Tax planning involves all aspects of tax matters, from investments and retirement planning to inheritance taxes. While this may mean spending more time with an accountant, the tax benefit makes up for the time and fees paid.

It can take many hours of work for the accountant or CPA – not only for them but for their team as well – but the savings the client will reap will surely translate into better returns. More importantly, the satisfaction of helping your customer is something that money can’t buy. It will hopefully lead to more services that can be offered to the customer. The experience gained from providing these services also gives the accountant or chartered accountant the opportunity to serve more clients.

Wilma Miranda is a Managing Partner of Inventor, Miranda & Associates, CPAs, Chair of Acpapp’s Media Affairs/Publication Committee, and a member of the Board of Directors of KPS Outsourcing Inc. The views expressed herein do not necessarily reflect the opinions of these institutions.

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