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ax planning involv

es conceiving of and impl

ementing various strategie

s in order to minimize

the amount of taxes paid f

or a given period. For a s

mall business, minimizing

the tax liability can

provide more money for e

xpenses, investment, or gr

owth. In this way, tax pla

nning can be a source

of working capital. Accor

ding to The Entrepr

eneur Magazine Small Bu

siness Advisor,

two basic rules apply t

o tax planning. First, a sm

all business should never

incur additional expense

s only to gain a

tax deduction

. While purchasing neces

sary equipment prior to t

he end of the tax ye

ar can be a

valuable tax

planning strategy,

making unnecessary

purchases is not

recommended.

Second, a small

business should

always

attempt

to defer

taxes

when possible.

Deferring taxes

enables the

business to use that mone

y interest-free, and someti

mes even earn interest on

it, until the next time

taxes are due.

Experts recommend

that entrepreneurs and

small business

owners conduct

formal tax

planning sessions in t

he middle of each tax year.

This approach will give th

em time to apply the

ir strategies to the curren

t year as well as allow the

m to get a jump on the fo

llowing year. It is import

ant for

small

business owners

to maintain a

personal awareness

of tax planning

issues in order to

save money. Even

if they employ

a professional

bookkeeper or

accountant, small

business owners

should keep

careful tabs on

their own tax

preparation in order

to take advantage

of all possible

opportunities for

deductions and tax savi

ngs. \"Whether or not you

enlist the aid of an o

utsider, you should under

stand the basic provisions o

f the tax code,\" Albert B.

Ellentuck wrote in the

Laventhol and

Horwath Small

Business Tax

Planning Guide.

\"Just as you would

not turn over th