As a small business owner, you are busy! You often don’t have the time to figure out ways to save money. For most people, the only time they see their CPA is in April when their taxes are due. We want to help you plan and we are here to help you save money and time. Read through this handy list of Tax Saving Strategies and contact us if you have any questions or would like to schedule a free consultation. We have helped hundreds of businesses like yours, and have served generations of families.
I. Consider S Corporation Status To Lower Self-Employment Taxes
Did you know you can file an Election by a Small Business Corporation, Form 2553, with the IRS to have S Corporation status applied to your business retroactively? By changing your status from sole proprietorship to an S Corporation, you could potentially avoid paying a large portion of employment tax.
2. Deductions for Wages
All payments to employees (salaries, bonuses, commissions, etc.) are considered expenses that qualify as deductions. Under S Corporation status, owners can be considered employees and draw salaries. Otherwise, payments to owners, partners, and members will not be considered business expenses.
3. For Some, C Corporation Status May Be The Ticket
Depending on the structure of your business, defining your business as a C Corporation may be preferable to filing as an S Corporation. With C Corporation status, you can take advantage of untaxed benefits afforded to employees, such as expenses for meals, disability/long-term care insurance, medical care, and sometimes reimbursements for tuition. C Corporation status is ideal for generating equity and collecting additional medical deductions.
4. Advertising is a Deductible Expense!
No matter the form or media used to promote your business, whether online through social media or in print, a majority of payments toward advertising and marketing are deductible business expenses.
5. Know the Difference Between Tax Deductions and Tax Credit
A tax credit matches every dollar to reduce your income tax liability. For example, a $500 tax credit saves you $500 in taxes. Tax deductions lower your taxable income. The amount of a deduction is determined by and equivalent to the percentage of your tax bracket.
6. Past Taxes Can Create Present-Day Write-Offs
Look at your returns from years prior. If you can find any net operating or capital losses, investment interest, home office deductions, or charitable contributions, you can most likely use these past losses to reduce present-day taxable income.
7. Start Early on a Tax Implementation Strategy
All good strategies have a forward-thinking attitude. The best way to avoid unseen penalties or additional interest against your books is to begin early in the year by working with your CPAs to understand filing requirements, which corporation status works best for the structure of your business, and how these two areas of knowledge can work to yield the most potent reductions.
At Estess CPAs, based in the New Orleans area, we specialize in serving the needs of individuals and small businesses with tax planning, accounting, bookkeeping, and payroll services. Call us today and schedule an appointment at our Belle Chasse or Luling offices:
7822 Highway 23 128 Lakewood Drive
Belle Chasse, LA 70037 Luling, LA 70070
(504) 433-5122 (985) 785-1470