Reducing Taxable Income with Tax Planning

In tax planning, to reduce your tax liabilities, what you can do is reduce your adjusted gross income. At this point of time, things will become more clear if you understand the definition of adjusted gross income properly. Adjusted gross income is nothing but your total income from all the sources after deducting the adjustments to the income, if applicable.

So, what you need to do is simply increase your adjustments as much as you can. For this, you should be aware of what kind of adjustments are available these days. Payment of alimony, payment of loan interest, in case of, student loans and traditional IRA contribution. Taxes can also be reduced if you can save for your personal retirement with the help of the popular 401(k) plans.

In tax planning, another way of reducing your taxable income is to raise your tax deductions as much as possible. There are certain expenses which can be included in the tax deduction and help you lower your annual income. These are mainly the interest payment you make on home mortgage, personal investments made in funds, gifts in the form of money given by you to a charitable foundation, money spent for availing health care facilities from hospitals, payment of taxes on estates and properties, and your state tax payment. Till date, it has been found that interest on mortgage is the best way of reducing your total income substantially.

Finally, making use of the available tax credits is also one of best tax planning measures which you can adopt. So, the tax credits related to expenses on college education, child adoption or savings made for retirement planning can help in reducing our taxable income. In the next section, let us discuss how to complete your tax formalities successfully.

Method for Tax Payments

Tax planning needs to be done by individuals as well as corporate business houses. There are authorized auditors who can assist you in filing your taxes. The procedure is simple and requires you to visit your certified accountant with your income details at the end of the financial year. After discussing with you different aspects related to tax planning, he will start the computation of the tax to be paid by you.

At this time, you can get the benefit of tax deductions as per the rules laid down by the tax department. Once the accounting and auditing job is complete, you need to file the tax yourself in the concerned office before the last date given to you. As a consistent tax payer, you can get the benefit of securing easy loans by producing your tax payment proofs before the bank authorities.

By following the above mentioned tips on tax planning, you will be able to save a lot of money and complete your formalities properly. So, use this knowledge practically and work smartly. Good luck!

Text 8

IMPORTANCE OF FINANCE

Finance is a very wide term and it can be said to be the study of the science of managing funds. Usually finance includes the areas of public finance, personal finance and business finance. It includes things related to lending, spending and saving money. An important aspect of finance is that individuals and corporations deposit money in a financial institution, especially banks, who in turn lend out money and charge an interest for their services. Here we take a look at the importance of finance and its management, whether it's for an individual or a corporation.

Importance of Corporate Finance

Corporate finance deals with financial decisions which an organization makes, whether it's investments, analysis of credit, selling of assets or products or acquiring assets. Maximizing corporate value and at the same time manage risks associated with investing in a particular product or project is the main aim of corporate finance. Moreover, corporate finance also studies the short-term and long-term implications of a decision and looks in to matters related with dividends to shareholders debt or equity. Matters related to taxes which a corporation has to pay are also taken into consideration when dealing with corporate finance.

Importance of Finance in Business

Finance for a business can't be undervalued and can be said that it's the lifeline of a business and is required for its well being. It can be said to be a lubricant which keeps the business running. Whether you have a small, medium or large business, you will always need finance, right from the beginning to promoting and establishing your product, acquiring assets, employ people, encouraging them to work for the development of your product and create a brand name. In addition to that, a current business may need finance for expansion or making changes to its products as per the market requirements.

Importance of Personal Finance

Personal finance budgeting is an important part of your long term plans to gain financial stability, especially after retirement. You need to have a clear idea of what you want in future such as the amount of money you want after retirement, the location of a place to live in, etc. You need to have a plan and goal of translating these ideas into reality. You also need to consider the things you have purchased in the past and the kind of things which you will purchase later on. This is an important step as this reflects that your will come up with a retirement planning for the future. You must be capable of identifying the good as well as bad choices you make.

While thinking of a long term plan, budgeting savings becomes an important part of personal finance. Savings would help you to make investments in the future so that you have a secure life. But then, having said that, you also need to take care to keep your expenses to the minimum, which is one of the most important personal finance tips which you should use.

Some of the most common expenses which you can reduce are electricity and water bills. Use these as sparingly as possible, especially when you leave a room, make sure that you switch of the lights. You may also like to know about personal finance planning for the layman, so that you know financial planning.

So these were the importance of finance management, whether for an individual or corporation. Finance is such a thing which it can't be substituted by anything, so make sure you use your finances in the proper order, so that you can secure your future.

Text 9

ACCOUNTING PRINCIPLES

What is accounting? This was the first question in my first accounting book, from my first ever accounting class. The official definition in the book provided by the American Accounting Association said, the process of identifying, measuring, and communicating economic information to permit informed judgments and decisions by users of the information. The main elements and activities of accounting means, firstly, any process of data which identifies, classifies and summarizes the financial events that occur within any organization. And secondly, a reporting system which transmits applicable financial data for concerned people that allow them to evaluate performance, make essential decisions and check the economic resources in the organization.