Small Business Tax Write-Offs
by Joe · 33 things on Twos
- IMPORTANT: Seek qualified and experienced counsel in applying the principles, and enjoy the savings.
- One of the best parts of owning a small business is the tax write offs that become available to you.
- You can effectively earn less, but come out ahead through tax savings.
- Here's how...
- Business Expenses
- Biz owners claim phone bills, home office utilities, dues, travel, education and legal that would be spent regardless as deductions
- The other deduction opportunity is business use of your personal assets including auto and home use.
- Employment taxes
- Employment taxes are 15.3% - Save by opening up an S-Corp and paying yourself a reasonable salary
- Taxpayers are given the ability to bifurcate their employment from their ownership and pay themselves salary, often times saving thousands in employment taxes.
- Benefits
- SMB owners are able to provide benefits for themselves including medical and retirement. Even better when the business is a solo enterprise.
- Medical reimbursement plans, SEPs, 401ks, DB Pensions offer potentially hundreds of thousands in tax savings & deferrals.
- Business Assets
- There is also the opportunity to own your own real estate in your business or alongside
- Owning your real estate direct in your business allows the expenses to be deductible and/or qualify for 199A
- Business automobiles also qualify!
- Succession
- Business owners have the ability to set up succession plans and sell at tax favorable capital gains rates.
- There's a break on Medicare tax on certain sales.
- Installment notes stretch out income recognition and create a retirement annuity.
- QSBS is also great!
- Other
- Choosing your entity type, year end, accounting methods
- R&D credits
- Qualified Business Income Deduction
- Hiring your spouse/kids to work in your business
- Summary:
- Make tax advantaged income your entire career through write offs and tax credit opportunities.
- Sell your business at a lower tax rate.
- Use leverage and large assets to defer taxes along the way.
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