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What Is Tax Strategy?

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Core Group

Strategy, according to Mr. Webster, is “a careful plan or method”. In business, a strategy is generally how you achieve your goals. So you may have a marketing strategy to obtain new customers, or a hiring strategy to source new employees. Strategy, no matter what words you use to define it, is forward thinking. Sadly, many business owners never think of their business strategically, but remain reactive. If you fall in the reactive category, I suggest you stop reading this and pick up a copy of The E-Myth by Michael Gerber.  

For the rest of you using strategies in your business, have you considered your strategy for taxes? If you are like most of the business owners we meet, the answer is no. The reason most business owners don’t consider a tax strategy is they’ve never been informed by their accountant or CPA about the potential savings a good strategy can provide. The dirty little secret in the tax preparation world is very few tax preparers HAVE a strategy for their clients. So why would they bring up something they don’t have? Well, the answer is they don’t.

The default “plan” is to take the mess of accounting records a business owner provides, and figure out how to arrive at the lowest number. Two huge problems with this. 

First, it’s solely reactive. If you are not having regular conversations with your CPA about your taxes during the year, they’re just going to take the numbers and prepare a tax return. Nothing strategic about it. You get what you get.

The second problem with this arrangement is that giving you the lowest number possible this year, could have serious implications in later years. Sure, you’re happy this year, but are you going to be happy next year when the same problem shows back up? We’re going to guess the answer is no.

So what does a good tax strategy look like? It starts with a deep understanding of your business. How you make money, how you grow, what are the pitfalls and threats? Next, a good tax strategy contemplates the rest of your strategy. What is your business plan for the next 3 years? The strategy isn’t the tail that wags the dog. In other words, you NEVER want to do something just to save money on taxes. Rather, once you’ve decided on your business strategies, your tax strategy should give you OPTIONS and, over time, minimize taxes and facilitate your growth. Lastly, your tax strategy has to change. Your business isn’t stagnant, so your tax strategy shouldn’t be either. As your business and strategies change, so should your tax plan.
To recap, a good tax strategy:

  • Considers the next 3 years of business plans.
  • Lines up WITH your other business strategies.
  • Is reviewed throughout the year to make changes as your business changes

Fortunately, for you, the Core Tax Process™ is designed around tax strategy and planning! We do not simply prepare a tax return for your business, we give you a strategy to lower your taxes and continuously work with you to make sure it fits your needs. We give you options as well as pros and cons of each, so YOU can make the best decision for your company.


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