Financial planning is the process by which we solve financial challenges in order to achieve our goals. This process is not only specific to businesses, but also to individuals. Tax planning is a part of financial planning, with which it goes hand in hand.
Personal financial planning can help you to draw the “map of money,” indicating where your finances come from and where they go, in order to direct them as you want. By making a personal financial plan, you will have the complete picture of your financial situation, with pluses and minuses, but also with opportunities and threats. Although it is a complex activity that will require time and involvement, drawing up a personal financial plan is not an activity for which you need specialized education.
On the other hand, tax planning refers to the process of finding ways to reduce your tax liability and to become tax-efficient. It will allow you to make better use of legal tax deductions, rebates and exemptions, as well as to identify investments that have the best potential to reduce your taxable income (life insurance, mutual funds, etc.). Meeting with a CPA tax preparation Highlands Ranch professional is the best way to make sure your financial plan is successful.
Tax planning is an important element of the personal financial management process and you should certainly not ignore it, so as not to end up with important debts or expenses that can affect you more than just financially.