Businesses must monitor tax news to ensure they comply with the law and exploit any opportunities. Tax news includes changes to laws and regulations, communication from tax authorities, and court rulings. Up-to-date information can help your company navigate the ever-shifting tax landscape.
This guide explains why your business needs to monitor tax news, how to do so, and when to delegate to a tax professional.
How tax news affects your business
Tax law changes frequently. Sometimes this involves only routine adjustments, such as increasing various amounts for inflation. However, other alterations can have a profound impact on your company.
News about the following taxes tends to affect small businesses or their owners:
- Income. Affects all parts of daily operations.
- Capital gains. Impacts investments and capital assets.
- Sales. Influences the revenue cycle.
- Payroll. Involves employees and—indirectly—independent contractors.
- Property. Concerns owned real estate.
- Estate. Factors in succession planning.
Developments in these taxes often interact with each other. For example, a change in estate tax could affect when or how a retiring owner exits their company. An exit strategy could impact income tax and capital gains tax significantly.
Monitoring tax news allows your business to respond appropriately to tax changes. This can mean taking advantage of new credits or deductions, avoiding—or planning for—an increased tax burden, or altering documentation procedures to comply with the law.
A company that fails to monitor tax news may discover issues when preparing their tax return or during a tax audit. Even the best tax professional can't always restructure transactions for optimal tax results after the fact. Wise businesses consider tax issues throughout the year.
How to monitor tax news
Monitoring tax news requires three steps.
Step 1: Identify relevant tax jurisdictions
First, identify relevant jurisdictions for each tax affecting your business. This can include federal, state, and/or local governments, depending on the tax. Each jurisdiction has its own rules and tax news to monitor.
Step 2: Identify credible sources of tax news
Next, select tax news sources to monitor for each jurisdiction. Many tax authorities—such as the IRS—issue their own news releases. Legislatures tend to keep bill information and other news on their websites. However, courts do not always make all relevant information available online.
Monitoring tax authority actions, potential new legislation, and relevant court cases for multiple jurisdictions can consume immense amounts of time. Secondary sources like mainstream news sites often prove helpful, but usually focus on the broadest issues. This can mean your business misses key tax news.
Some companies focus on monitoring tax news as part of their tax research software. These services track developments in every jurisdiction and provide summaries and explanations to make following tax developments far easier.
Step 3: Uncover new opportunities, threats, and requirements
Finally, analyze the gathered news sources to determine what tax planning opportunities, threats, and compliance requirements your company faces from relevant tax news. This can prove difficult and highly technical. Tax professionals can help your business interpret tax news and its likely impacts.
Delegating tax news monitoring
Using a tax professional offers many advantages over monitoring tax news directly.
Tax professionals often enjoy access to advanced tax research software that eases the burden of monitoring tax news. Anyone may purchase such software, but it often costs thousands of dollars per year.
The advanced training of a certified tax professional helps them correctly interpret the impact of tax news. Complicated tax laws and the interconnected nature of different taxes often make this process difficult for non-experts.
Tax professionals also tend to specialize by industry or type of company—such as small businesses. A CPA or EA that serves a specific type of business will monitor tax news for those businesses much more efficiently and effectively.
Monitoring tax news—or hiring a tax professional to do so—allows your business to avoid compliance issues and take advantage of available tax opportunities.
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