Taxes are taxes. You have to pay them. There’s no way around it, right?
Not entirely.
Many small business owners are overpaying their taxes without even realizing it, and they don’t have to.
In this podcast episode, I share my years of experience in helping businesses use strategies to legally minimize their tax liability and keep more of their hard-earned profits. From entity structuring to retirement planning to hiring family members, you’ll discover proven tactics to plug those hidden profit leaks and boost your bottom line.
Listen to the full episode to find out how you can pay the IRS less and keep more for your business.
You’ll Learn…
- How tax planning finds hidden profit leaks and increases your business’s profitability.
- Various tax-saving strategies, such as optimizing your business entity and more.
- How captive insurance companies can protect your business and provide tax benefits.
- Charitable giving strategies that can reduce your taxable income.
- Equipment rental tax strategies that can provide income and tax deductions.
- Strategies when selling property or your business that reduce your taxable income.
- How tax planning can give insights on the optimal timing for paying monthly expenses.
Tax Planning Defined
Tax planning goes beyond simply preparing tax projections or returns. Tax planning is a deep dive into your business and personal goals, and then developing tailored strategies to help you meet those goals. Effective tax planning considers your entire financial picture, including your taxable income, to find ways to legally reduce the taxes you owe. By proactively planning, you can ensure you’re paying the least amount of tax possible without running afoul of the law.
Profit First Tax Account
The Profit First system can be a game-changer for managing your taxable income and getting ready for tax season. By setting aside 15% of your revenue in a dedicated tax account, you will be prepared for a tax bill at the end of the year instead of unpleasantly surprised. This system helps you stay on top of your estimated tax payments, rather than scrambling to come up with the money when it’s due.
Reducing Estimated Tax Payments
One of the key benefits of good tax planning is the chance you have to reduce or even eliminate certain estimated tax payments. By using strategies to lower your taxable income, you may be able to skip the January 15th payment, freeing up that cash flow for other business priorities. This can have a big impact on your overall financial position, allowing you to keep more of the money you’ve earned rather than handing it over to the IRS.
Entity Type and Taxable Income
The type of business entity you have can have a big impact on your taxable income and the strategies you can use to lower it. Certain entity types, such as corporations, can help you reduce self-employment tax and take advantage of other tax-saving opportunities. Regularly reviewing your entity structure and making sure it still matches your current and future business goals is important to getting the most out of your tax savings options.
Retirement Planning Strategies
Having retirement planning in your overall tax strategy can actually give you good tax benefits. By establishing a retirement plan tailored to your business, you can not only save for the future but also reduce your taxable income in the present. This can be very beneficial for small business owners who may have overlooked retirement planning as part of their financial strategy.
Captive Insurance and Taxable Income
Captive insurance can be a great tool for managing risk in your business and reducing your taxable income. By establishing a captive insurance company, you can self-insure against a number of liabilities and protect your business, while also creating a stream of income that can be used to offset your taxable income. This strategy helps you to take greater control over your insurance costs and potentially generate long-term investment returns.
Reviewing Tax Situation
Regularly reviewing your tax situation with a qualified professional is essential to making sure you’re not overpaying on your taxes. Give your tax preparer all the necessary documentation, such as recent tax returns, insurance information, and retirement planning details. They can then give you an objective, third-party assessment of your tax situation. This review can show you chances to reduce your taxable income and make sure you’re taking advantage of all the deductions and credits available to you.
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