Stages of Tax and Financial Planning

There are three general stages that play into tax and financial planning: past, present, and future.

Past

When we talk about the past, we are referring to historical data. For business owners this would be your financials through a certain date. This is your past financial data. It is the starting point for any kind of tax or financial planning. On the individual side, this past information could be your W-2 paystub as of a certain state if you have W-2 income, for example.

Present

Once you have your historical data, we use that and evaluate and analyze what everything looks like right now. What is your current financial position? We take this a step further by projecting out your next few months to get an accurate picture for the entire year. Remember that the current year overall is your present. This is the time frame that we are working with. We can use this information to make decisions about what we can do during the rest of the year to affect our current tax liability and hopefully decrease it or we can look at it from another perspective and look at our income and look at how we can increase that.

Future

After planning and estimating our entire current year of financial activity, we can then take the next step beyond current year income and tax it. That next step is budgeting for the following year and even long-term budgeting for several years in the future. This is the next level of tax planning. This is where you are going to look overall at the broader picture of your financial activities and see what you need to do to make things happen in the long run. If you have a business and you create a budget, you are helping your self that limit for what you expect to happen in the following year so you can plan accordingly.

Each of these stages of tax and financial planning and analysis is very important to the overall health and success of your business or personal finance. If you don’t currently have a CPA working with you and helping you through the three stages of tax and financial planning and analysis, please reach out to me at catherine@cowartroecpa.com or 504-252-0652. I would love to help you out!