Growing your business doesn’t have to mean growing your legal matters too
Growing your business doesn’t have to mean growing your legal matters too. Pretty much all of us would like to keep as much money as we can and not have to worry about tax deductions every year. Just as Albert Einstein said, “the hardest thing to understand in the world is the income tax.” And Einstein is accurate, so here are some tips on how to help legally reduce your 2017 taxes.
Keeping an eye on AGI (Adjusted Growth Income). Most of us when doing our taxes, we focus more on our taxable income than our adjusted growth income. Even though your business AGI is just as worthy of your attention as it is as your taxable income. It can impact the deductions and credits that you and your business are eligible for.
Using accountable plans. An accountable plan is an employee reimbursement allowance arrangement or reimbursing employees for business expenses that complies with IRS regulation. Includes having a business connection, that is, they must be paid while performing services as an employee and an employee must have adequately account to the employer for expenses within a reasonable time. Meaning, date, time, place, amount, and business purpose for the expenses.
Making smart tax elections. Although the year is coming to an end, it is still possible to favorably impact taxes by making these tax elections. A good example would be, deducting vehicle expenses based on the actual cost or the IRS mileage, deducting home office expenses based on actual costs or the IRS simplified, or even claiming disaster losses on prior-year returns. Disaster losses refers to liability insurance, workers’ compensation insurance, commercial auto insurance, or business interruption service insurance.
Looking over carryover, is a no. Keeping track of your carryovers can help build up for your use the following year. Meaning keeping track of carryover such as, capital losses, general business credits, home office deductions, net operating losses, or even charitable contribution deductions. A qualified CPA will make sure this is done properly.
Using tax-free ways to extract income from your business. There are a few ways that help reduce your taxes by implementing tax-free fringe benefits, such as medical coverage and retirement plans, and loans by business that meets a no- or low-interest basis. This is particularly tricky and again you are advised to meet with a reputable CPA to better understand your options.
Fringe Benefit Plans. A fringe benefit is a form that pay the employees for the performance of service that they do. When you provide an employee with a fringe benefit plan you or the business allows the employee to be able to use a business vehicle, health insurance, retirement plans and paid time off, which can all be used as part of taxes.
The attorneys at Bridge Law LLP will meet with you and help you determine how best to set up your company based on your business goals.
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*The information presented in this article does not constitute legal advice and is not intended to create an attorney-client relationship. The information presented in this article is not tax advice and you should consult a CPA or other qualified accounting and tax professional to discuss your specific circumstances.