Tax Planning: What it is and why a company should care

Business planning is quite broad and can cover different aspects and sectors within a company, and in each of them, there is a specific step. One is tax planning. Often forgotten or overlooked and even unknown by the organization, it causes several negative impacts on the company if not managed correctly.

If you want to know more about this subject, continue reading our post, where we will address important questions about tax planning for your company.

Tax planning is all about managing your company's tax payments. Just as inventory, finance, sales, HR, and other areas of the company are managed, compliance with tax obligations must be organized and planned.

In addition, tax planning also means creating strategies to reduce the tax burden on company operations legally. That is, it is a way to pay fewer taxes while complying with the law.

What are the types of Tax Planning?

Operational

This model uses the company's basic procedures to comply with its tax requirements within the organization's usual working routine and deadlines.

The operational tax planning is prepared for 3 to 6 months, and it must present all the means that will be articulated to achieve the established objectives. Action plans need to be developed in the projected period.

In addition, the ideal is to specify the responsibilities of each person involved and the activities, tasks, and resources that will be used, generating conditions for achieving the objectives.

Strategic

This model uses the company's basic procedures to comply with its tax requirements within the organization's usual working routine and deadlines.

Preferably, strategic tax planning should come before operational planning as it must be implemented from the company's incorporation, such as choosing the best tax regime and other specificities depending on the field of activity, capital structure, location, human resources hiring model, etc.

Its objective is to design the future of the business and contribute to defining the organization's vision, mission, and values.

In this way, this type of planning is normally prepared for 5 to 10 years, needing to be more detailed and requiring constant revisions so that it does not become inoperative.

As it considers factors that result in decisions that greatly impact the company's characteristics, it is usually done by owners, presidents, and boards of directors.

Tactical

Tactical tax planning focuses on the medium term. In this case, its implementation should be planned for between 1 and 3 years.

Follows the same logic as strategic planning, differing only because it is aimed directly at the areas and departments of the company and not by the global vision of the organization, as is the case with strategic planning.

In summary, tactical planning elaborates on the decisions and projections for the company's sectors. In addition, tactical planning makes the connection between Strategic Planning and Operational Planning.

During this planning, issues of how the actions will be carried out and the strategies that will be necessary for each sector to work to achieve the company's general objectives are addressed.

Faced with a country with a tax burden that, in addition to being high, is also complex, tax planning is a shield to protect your company's finances. It is also a huge source of opportunities to reduce costs and expenses, which results in better results. Thus, tax planning should be addressed.

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