This could be achieved in the case you want to cut down the taxation expenses your company incurs if you know the right way of doing good tax planning. Know in 4 steps!
For both individuals and legal entities, saving money is quite an important matter. If you have a company, you should be interested in saving on taxes, but definitely without committing some irregularities against the tax authorities.
This means learning how to do tax planning for your company is one of the best ways of reducing what you spend on taxes legally. That is not evasion or avoidance of taxes, but the utilization of loopholes existing in the tax law itself.
Would you like this? Below, we’ll guide you through the 4 steps to do tax planning for your company.
Happy reading!
What is tax planning?
Anyone who already has a business knows how heavy the tax burden is. There are federal, state and municipal taxes on different products and services. They are often charged cumulatively, which is popularly known as cascading taxation.
However, not everyone knows about the possibility of reducing corporate tax expenditures by adopting simple practices — such as tax planning. This is a set of strategies, actions and studies aimed at optimizing tax collection.
It is also known as tax avoidance, which should not be confused with tax evasion, which is the avoidance of paying taxes. In the tax planning process, tax laws are respected. To this end, it is structured based on in-depth knowledge of the activities provided and the applicable tax regimes.
Therefore, it is necessary to seek adaptation to the best tax regime, in addition to researching the tax advantages that a company may benefit from. The possibilities of reducing or postponing the payment of a tax are also verified — without breaking the law.
Why do good tax planning for my company?
After checking what tax planning is, it is worth checking why you should do it for your company. The main advantage provided by tax planning is saving resources. After all, you avoid paying taxes beyond what you actually owe.
Having good tax planning also improves the company’s financial security, as it reduces the occurrence of accounting errors. In addition, it tends to avoid fines and penalties from the tax authorities, considering that you will hardly fail to pay your taxes.
Furthermore, the amounts saved can be used for other purposes within the company, such as making investments, improving products, financing expansion, increasing staff, etc.
The sum of all these benefits provides an improvement in financial health and makes it possible to improve the competitiveness of your business compared to your competitors. Therefore, your company will have a better chance of standing out and consolidating itself in the market.
How to do tax planning in 4 steps?
By now, you probably want to know how to do tax planning for your company. Check out the 4 steps below!
1. Collect and organize information about your company
The first step in your company’s tax planning involves gathering and organizing all relevant information about your business. To do this, look for an accountant or accounting team that can gather information about:
- structure and size of the company;
- current tax regime;
- branch of main activity;
- other activities provided.
This information will be important for you to know which paths can be taken to reduce the incidence of taxes. For example, you can change your tax regime, see which products or services have higher tax burdens, find tax exemption or incentive situations, etc.
2. Check the legal nature of the enterprise
In order to operate, a company must be legally incorporated. There are 25 possible types of legal nature. Each of them has limitations regarding share capital, annual revenue , number of partners, number of employees, and so on.
Among the most common are:
- limited liability company (LTDA);
- public limited company (SA);
- small business enterprise (EPP);
- individual microentrepreneur (MEI);
- microenterprise (ME).
The legal nature of the company will define which types of tax regime can or cannot be applied. In other words, it is essential to know which one may be most advantageous to your business and, if necessary, plan to change it.
3. Look for the best tax framework
The next step in tax planning will be to choose the best tax regime available to your company. It is possible to change it each year. So, if you do need to change it, plan ahead and don’t miss the deadline, which is the beginning of each fiscal year.
The tax regimes in the country are:
- real profit — taxes are calculated separately and are mandatory for companies that earn more than R$78 million per year;
- presumed profit — in this regime, the rates may vary according to the activity carried out by the company;
- simple national — tax collection is simplified, being applicable only to ME, EPP and MEI.
It is important to highlight that the choice of tax regime, in addition to defining the main tax obligations, impacts the ancillary obligations. Therefore, this choice must be made carefully, so that your company collects only the taxes required in the performance of its activities.
4. Change the way you do business
After organizing the data and defining the legal nature and tax framework that best suits your business, you need to analyze how to operate in this scenario. Given the country’s tax complexity, this may be the most complex task of planning.
However, by checking the impacts of taxes on your business, you can change the way you conduct your operations. This way, you can reduce, postpone or even eliminate the incidence of some taxes.
For example: depending on local taxation, you may choose to move your factory to a location that offers tax incentives or has a lower tax burden. It is also valid to replace a certain item in your production with another that has a tax advantage.
In other words, it is important that you are able to identify what can contribute to reducing tax expenses, as well as taking the necessary measures to do so . This involves defining objectives, deadlines, costs, as well as reviewing and adjusting the planning — if necessary.