Tax planning and legal tax schemes

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Tax planning and legal tax schemes mean an official reduction of companies’ tax liabilities. Accurate tax planning allows the taxpayer to minimize tax liabilities in the best possible way in each financial year.

There are several fundamental goals of tax planning. For example, it reduces tax liabilities, the payer saves the maximum amount of tax and organizes his financial transactions in accordance with tax decisions. The planning also complies with the provisions of the tax legislation, which minimizes any legal proceedings. 

One of the biggest advantages of legal tax schemes is that profits can be directed to investments. This is the most productive way to make a reasonable investment, making full use of the resources available thanks to tax benefits. The investment of taxes generates «white» money that flows through the economy, helping the economic development of the country. Thus, tax planning contributes to the economic stability of both the company and the entire country.

It is important to start creating it by calculating the tax burden. The easiest way is to divide the tax expenses by the sales volume and multiply by 100%. For example, if a company earned $ 100,000 and paid $ 25,000 in taxes, the effective tax rate will be 25.

The higher the tax burden coefficient, the more money the company should allocate for taxes. This norm is formed by the Federal Tax Service, you can even calculate it yourself.

If there is a need to correct the situation, then it is worth carrying out a full set of measures to optimize the tax burden. The plan consists of the following actions:

  • Make a schedule for paying tax debts.
  • Analyze possible hazards and inconsistencies in the calculations. 
  • Create effective control over the movement of funds.
  • Consider regulatory legal acts, predict the tax burden. 
  • Analyze the transactions and agreements that have already been carried out.

These actions can be applied both independently and in a complex.

If executed correctly, tax optimization methods will reduce costs. Having created the necessary comprehensive strategy, the company will be able to predict further actions, results and deadlines for which it is possible to achieve the above results. The main methods used in companies are the following:

  • Tax deferral. Invest money in certain investments or make a pension plan. Contributions allow you to postpone the payment of tax for several years.
  • Obtain a legal preferential status. 
  • Changing the corporate structure. 
  • Use of available legal tax benefits – apply reduced tax rates, purchase preferential status.
  • Compliance with the tax regime.
  • The transition of the tax base to a preferential regime.

These methods are recommended in the practice of millions of companies.

Use of tax regimes

The most common way to optimize taxation is to transfer the tax base to a preferential tax regime or transfer it to an enterprise with a lower level of tax burden. This method combines a fairly high efficiency with a simple implementation.

Here it is worth paying attention to the choice of the optimal tax regime option for a particular taxpayer – either 6% of income, or 15% of income minus expenses.

Tolling system

A tolling system can be defined as an arrangement in which a company with specialized equipment processes raw materials or unfinished products for another company. Such production allows companies to offer their services on request and at any time within the framework of an agreement that is beneficial for both the consumer and the manufacturer. It is also a great way to establish contacts – if you are starting a company and you have raw materials or unfinished products that require certain equipment, then entering into a paid production agreement can help you finish these products and build a relationship with another company.

However, this method is not safe since it can be considered as an illegal tax savings. After discovering that the company has split the profit among different companies, the tax inspectorate will calculate the taxes again and even add a fine. 

In addition, a simplified tax system will be an excellent option for small businesses – 6 % of profit or 15% without expenses. To choose the right option, it is worth hiring a person who, in the context of legitimate tax strategies, will help organize the development process. 

This method will help to optimize not only the payment of taxes, but also all the processes taking place at the enterprise.

Optimization of payroll taxes

At the moment, there are legal tax schemes for optimizing salary taxes within the framework of tax planning including the following:

  • use of a self-employed.

A self-employed person works, receiving a small income, and must pay a small tax for his activities. 

  • conclusion of a service agreement with a sole proprietor.
  • student agreement.

It is concluded for the purpose of training and obtaining work experience by a candidate for a job. It does not bear the same difficulties as the termination of an employment agreement. 

The following methods are also used in practice:

  • Social benefits.
  • Salaries.
  • Other payments that are not subject to personal income tax and contributions.
  • Payments that are not subject to contributions.

All legal entities have a period of difficulties in taxation. There are many different reasons for this, the main thing is to analyze the situation in the company in time and take appropriate measures. Using several methods at once, you can avoid losses due to large expenses on paying taxes and stay on the market to function further.