One of the main things we do here at BAAP C.P.A. as a part of our tax services in Clearwater is help businesses reduce their tax burden
So, in this article we’re going to share with you our top 3 business tax tips for 2019.
As a business owner, you deserve to get compensated for everything that you do for the business. There are many ways with which you can pay yourself as the owner of the company. It can come in the form of wages, distribution, rent, allowances, and royalties, among others. How you pay yourself will also differ based on the structure of your business. How you compensate yourself will be different if you are a sole proprietor, S corporation, C corporation or LLC.
As part of our business tax services in Clearwater, we teach clients the right level and tax-efficient wage to pay themselves. We also teach our clients what are the tax-efficient ways to draw money from the company. If not done right, business owners can be taxed as much as 40% of the income they make. We help business owners minimize this tax exposure and lower the tax that they have to pay.
As a business owner, you can take advantage of retirement plans to minimize your tax burden. Contributions you make to a 401(k) can be deducted, saving on taxes. On the other hand, with a Roth IRA, you pay taxes on the money you contribute now, but it grows tax-free and can be withdrawn during your retirement without paying taxes on it then.
There is no retirement solution that is best for all businesses and business owners, so it’s good to sit down with a business advisor who can help you understand the pros and cons of each option and choose the solution that’s best for you and your business.
Many business owners hire their children to work for their company. Turns out, it doesn’t just teach your kids responsibility. It also helps reduce your tax exposure.
Income shifting allows transferring income from a high taxpayer to a lower tax bracket.
For example, instead of buying your children a car and making their car insurance payments for them, your company can hire them, and they can pay for their own car and insurance. Their wages are a business expense that will reduce your tax burden. Meanwhile, your children will be taxed at a lower rate or not at all, resulting in a net tax savings for your family.
Of course, your children have to actually do the work they’re being paid for. 🙂
If you are looking for business tax services in Clearwater, Largo, Dunedin, Oldsmar, Lutz or , to help you with accounting, tax preparation or business advisory services, contact BAAP C.P.A for a free consultation.