Smart Tax Strategies That Can Help Your Business Save Big Each Year
While running a business, taxes are not something you can ignore or avoid. They are essential, and they come with a plethora of penalties, interest costs for inappropriate filings and fines. Since there are quite a few types of taxes you need to consider, it makes more sense to outsource your tax planning and management.
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Understanding the federal business taxes and state taxes can become a full-time job in itself for most business owners and executives. Small businesses often have limited funds and a limited number of employees, who already have their hands full. Therefore, giving the responsibility of tax filing to an experienced and professional agency only makes sense. Only a professional can help you get the most from your preparation of tax return each year, under all circumstances.
Complete your payrolls before the last quarter
The end of the year is near, and so is the deadline for completing payrolls for S-Corporation owners and LLC-S Corps. If you are waiting around until the last quarter to finish this, you are potentially attracting an IRS audit towards yourself. In all probability, you have already completed your quarterly payroll, and this is a great time to adjust it. You may want to increase it or decrease it depending on your net income.
Put your kids on the company payroll
Putting your kids on the payroll is an underutilized tax-savings idea. Most LLC owners can include their kids on the payroll and pay them too for bona fide services. It is a powerful tax-saving tool since the business does not need to withhold payroll taxes if the child is below 18 years of age! For those who are wondering what kind of jobs are all right for teenagers and kids, filing, cleaning, organizing, ushering and shredding paper can all become high paying jobs if you are creative enough.
Watch out, if you own an S-Corp or C-Corp
The child can also use the standard deduction of $6,300 (as of 2017) against the amount you pay. It attracts no income taxes at all. In case you are the owner of an S-Corp, the procedure is a little more stringent. The Internal Revenue Code requires the owner of all C-Corps and S-Corps to withhold FICA from all the employees on the company payroll.
Your spouse can help you save too
Very similarly, putting your better-half on the payroll can also help you save a lot on taxes. This is also advisable for those, who have already spoken to their spouse for contributing money to company’s 401 k for tax planning. Unless you are on the same platform about the 401 k contribution, it makes no difference. The deduction for your spouse’s salary will end up showing on your joint tax return at the end of the day.
Setting up new business accounts for your children or your better-half is not going to be a breeze. You need to follow each position for your family members with papers, payment documents and more. It is essential to consult an expert advocate or tax consultant before you file your tax return in the year’s end.
Author bio: Steve Cameron is a tax expert. He advises many leading corporations and organizations on tax deductions regularly. Find out how to begin your preparation of tax return from this year from Steve right here.
