It is officially everyone’s favorite season of the year. No, I am not referring to one of the traditional four seasons; I am, of course, referring to tax season. It seems that every time tax season comes around, people tend to go into a frenzy. A slew of questions always arrive at this time. “How much will I owe?” “If I do this, then that will lower my tax liability, right?” “What else can I do so that I don’t have to pay more in taxes?”
While these are all fair questions, there is more to a healthy financial balance than minimizing your tax liability. For instance, having a lower net income/profit for the year may be helpful at lowering your tax liability, however, if you needed financing from a bank, the bank would be more open to lending to a company with stronger historical performances. Or, there could be a situation where you have a line of credit with a bank and you need to figure out where to best spend your money. The accountant could suggest that you pay off some of the debt in your business, but a consultant could suggest you invest in more people and equipment for that next stage of growth.
The point here is that every member of your financial team can have a different perspective on what he/she believes is best for you and your business. That is because, in most cases, each of these team members is focused on one aspect of your financial life and therefore makes decisions that only benefit that area of expertise. To ensure that you have a healthy financial balance, it is best to have each member of your financial team focused on the “big picture” of your prosperous life. If each member is aware of the goals for your business and yourself as an individual, then each decision made will be conscious of achieving those goals.
Instead of solely focusing on minimizing your tax liability this tax season, no matter how tempting, be sure that each decision helps lead to your self-defined prosperous life.