30 Business Tax Strategy Terms
Welcome to our guide on 30 Business Tax Strategy Terms! In this document, we will cover some key terms and concepts that every business owner should know when it comes to taxes. We understand that tax season can be a stressful time for many entrepreneurs, but with the right knowledge and strategies in place, you can navigate it with ease.
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So let’s dive in and learn about these essential tax terms together. By the end of this guide, you’ll have a better understanding of how taxes work and some tips on how to minimize your tax liability while maximizing your business’s financial success.
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Tax Compliance: Adherence to tax laws and regulations in all jurisdictions where the business operates.
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Tax Planning: Strategic planning to minimize tax liabilities within the legal framework.
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Corporate Tax Rate: The tax rate imposed on a company’s profits.
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Income Shifting: Strategies used to shift income to lower tax jurisdictions.
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Tax Deductions: Expenses that can be subtracted from gross income to reduce taxable income.
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Tax Credits: Specific amounts that can be used to directly reduce tax liability.
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Deferred Tax: A tax obligation that a company owes but does not pay immediately.
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Transfer Pricing: Setting prices for transactions between associated companies in different countries.
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Capital Gains Tax: Tax on the profit from the sale of an asset.
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Withholding Tax: Tax withheld from employee wages and paid directly to the government.
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Value Added Tax (VAT): A consumption tax placed on a product at each stage of production before the final sale.
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Tax Exemption: Income or transactions legally exempt from taxation.
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Tax Avoidance: Legally exploiting the tax system to reduce tax liability.
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Tax Evasion: Illegal practices to escape paying taxes.
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Fiscal Year: A one-year period that companies use for accounting purposes and preparing financial statements.
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Tax Audit: A review of a business’s financial accounts to ensure information is reported correctly and complies with tax laws.
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Tax Haven: A country or jurisdiction with low tax rates and favorable financial laws for foreign investors.
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Depreciation: The gradual deduction of an asset’s cost over its useful life.
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Taxable Income: The amount of income used to calculate how much tax an individual or a company owes to the government.
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Excise Tax: Taxes paid on specific goods, such as alcohol and tobacco.
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Tax Bracket: Categories at set income levels that determine the rate at which income will be taxed.
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Tax Relief: Government-approved deductions that reduce taxable income.
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Indirect Tax: Tax collected by an intermediary (like a retail store) from the person who bears the ultimate economic burden of the tax (like the consumer).
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Double Taxation: The imposition of two or more taxes on the same income or activity.
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Tax Shield: A reduction in taxable income achieved through claiming allowable deductions.
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Payroll Tax: Taxes imposed on employers and employees, usually calculated as a percentage of the salaries that employers pay their staff.
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Tax Lien: A legal claim by a government entity against a noncompliant taxpayer’s assets.
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Foreign Tax Credit: A tax credit for income taxes paid to a foreign government, used to avoid double taxation.
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Alternative Minimum Tax (AMT): A supplemental income tax required in addition to baseline income tax for certain individuals, corporations, estates, and trusts.
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Estate Tax: A tax on the transfer of the estate of a deceased person.
Understanding these terms is crucial for businesses to navigate the complex world of taxation efficiently and effectively.
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