Business strategy helps in reaching certain business objectives by assisting the entrepreneurs. To reach a certain position in the market, the management should carry on the company by pleasing the customers and thus get the desired result. Gaining organizational goals through competitive efforts, thus attracting customers is what business strategy does. The present development of the company is due to the initial business strategies and approaches taken by the company.

It is the planning done to take the company to a desired position in the future. It also determines the destination of an organization. To reach this goal the company has to cross certain hurdles, these include attracting the customers through varied moves and actions, thus competing successfully, gaining strength, to reach the aim.

If your company needs to be successful in its business planning, then it should have a tax planning strategy. Tax planning is meant to ensure tax efficiency. It is an essential part of a financial plan. To minimize the amount of taxes paid in a period, various strategies should be implemented in tax planning. Minimizing these liabilities means, it can be used for other purposes like money for expenses, investment or growth. Making unnecessary purchases is not recommended for small businesses. Deferring taxes by small businesses allows them to use the income interest-free; even they can earn interest on it.


General areas of tax planning include:-

Accounting methods

Keeping the financial records of business according to the rules and regulations is what accounting methods are for. The two main record-keeping methods are:-
  • Accrual basis
  • Cash basis

Inventory valuation method

It is important for businesses as selecting inventory valuation can guide to substantial tax savings.

Benefits plans and investments.

Various employee benefits are included in the tax planning like life insurance, health insurance, and retirement plans.

Methods of tax planning include:-

Short term tax planning

To reduce the taxable income in a legal way, certain plans are decided and executed at the end of the income year.

Long term tax planning

This is a plan executed to help in the long run, unlike the short term plan which helps immediately. It is planned at the beginning of the income year and followed around the year.

Permissive tax planning

This includes executing plans which come under the different provisions of law.

Purposive tax planning

If the selection of investment is correct, then it can avail the maximum benefit to the individual. It is the duty of everyone to do proper tax planning.