| What's the most tax advantaged group in the tax | | | | the next year. Regardless of when the taxes are |
| code? The answer may surprise you, especially if | | | | actually filed, the facts that determine how much tax |
| you're a business owner. But the answer is simple - | | | | you pay are history at that point. |
| you, the business owner are POTENTIALLY the most | | | | Showing Zero Income - Tax planning is not a |
| tax advantaged group in the tax code. Believe it or not, | | | | matter of the questionable and risky process of wiping |
| business owners get all the breaks. And no, the tax | | | | out the income "on the books" to pay no tax. This |
| breaks are not just for the Fortune 500 companies, but | | | | practice severely reduces the value of your business, |
| the middle market, small business, or family owned | | | | your ability to get financing without personal |
| business all the same. I would add a caveat to make it | | | | guarantees, and your ability to get bonding. The big |
| a little more believable and accurate. The most | | | | companies do tax planning while showing a profit and |
| advantaged group in the tax code is the INFORMED | | | | providing shareholder value and return. They need to |
| business owner. If you feel encumbered by the tax | | | | show the biggest profit possible while reducing one of |
| code and business laws, and don't see too many | | | | their biggest expenses - taxes. |
| breaks coming your way, it's because you fall into the | | | | I'm Getting a Refund - Please, once and for all, |
| unfortunate group called the UNINFORMED business | | | | getting a refund is not a good thing. It doesn't mean |
| owners! | | | | you didn't pay tax - it means you gave the |
| So, how do you become one of these favored | | | | government an interest free loan. And since the |
| informed business owners so you can start to see | | | | government is unlikely to give you an interest free loan, |
| these benefits come your way? The answer is | | | | don't give one to them. You need to look at the payroll |
| strategic tax planning. Or better yet, you need to find a | | | | and income taxes that you and your business are |
| professional that can provide you with comprehensive, | | | | paying. For cash flow purposes, you want to pay your |
| strategic tax planning. To define it, let me first tell you | | | | taxes timely, but as late in the game as possible. |
| what it's NOT. | | | | What Strategic Tax Planning IS: |
| Strategic Tax Planning is NOT: | | | | Entity Structure Planning - Create the optimal entity |
| Tax Compliance - Tax compliance is a necessary | | | | structure for your business and you personally to |
| evil. Preparing financial statements, filing tax returns, | | | | maximize your tax benefits and legal asset protection |
| making estimated payments, and so on, is tax | | | | benefits. |
| compliance. It is a very necessary service, but takes | | | | Compensation and Benefit Planning - Develop |
| more dollars out of your pocket than what it puts into | | | | strategies that meet your personal and business short |
| your pocket. I like to think of tax compliance as the | | | | and long goals and objectives. Its really about |
| scorekeeper of the football game. Keeping score as | | | | minimizing taxes and out of pocket expenses paid with |
| the game progresses. But if your team is losing big on | | | | after tax dollars. The goal is maximize your income |
| any given Sunday - Do you get mad at the | | | | and the amount available to the business by minimizing |
| scorekeeper? No! And please don't get mad at your | | | | your taxes across the board |
| scorekeeper / accountant, they are doing exactly | | | | Maximize Advanced Retirement Planning and |
| what you pay them to do. Tax planning, on the other | | | | Income Deferral Opportunities - Business owners must |
| hand, is the coach that formulates the game plan and | | | | annually capitalize on techniques to maximize monies |
| develops the strategies throughout the year. Are you | | | | and continued income streams available for life after |
| and your business missing this planning function? | | | | the business. |
| The Big Three Tax Ideas - This is my nickname | | | | Utilize Succession, Exit Strategy, and Estate |
| for three practices that sometimes give business | | | | Planning Opportunities - Remember, when you exit |
| owners a bad impression of tax planning. The Big | | | | your business, it will be a taxable event. Develop a plan |
| Three are again NOT tax planning. The Big Three are: | | | | to minimize taxes on the transfer to ensure you walk |
| 1. Buying Equipment solely for the "write-off" - if you | | | | away with as much money as possible. |
| need the equipment great. Buying equipment in the | | | | Avoid or Eliminate Questionable or "Grey Area" |
| most tax advantaged manner is wise, but I have seen | | | | Tax Planning Strategies to reduce Audit Risk - All your |
| too many garages and warehouses full of new, | | | | tax planning strategies should be supported by the |
| unused equipment. If the equipment is not going to | | | | black and white language of the IRS Tax Code and |
| make you money today, don't buy it. Does it make | | | | Regulations. For the informed business owner many |
| business sense to spend $100 to get a $30 deduction? | | | | opportunities exist. |
| No! | | | | Think About It..... The Need for Tax Planning! |
| 2. Paying yourself a bonus to pay your taxes. You are | | | | Your business is an S-Corporation to avoid corporate |
| actually increasing your taxes (payroll and income) to | | | | level tax. The business earns $100.00. To put that in |
| pay the tax. Again the idea with tax planning is to | | | | your pocket, you must pay employee and employer |
| REDUCE your tax. | | | | level payroll tax-15.3%. Your remaining $85.00 is then |
| 3. Writing off obsolete inventory - If you have obsolete | | | | subject to your personal tax rate-35%. You now have |
| inventory, great, write it off. But again, this is not tax | | | | $55.00 in your pocket. Do you dare spend it and |
| planning. | | | | reduce it further with sales tax? No, you decide to |
| End of the Year Ideas - "Wow, Mr. or Ms. | | | | save it. If you die with that $55.00 in your pocket, the |
| Business Owner, you've had a great year or worse | | | | estate tax can tax an additional 45% from you and |
| yet great last year - you owe a lot of tax." "What Can | | | | your surviving family members. You now pass on |
| I do?" "Well you made money so you will simply have | | | | $30.00 to your family after passing $70.00 to the |
| to pay a lot of tax!" If this sounds familiar you know | | | | government in the form of taxes. |
| this is not tax planning. Tax planning cannot simply be | | | | If that doesn't offend you - just keep on doing what |
| performed at the end of the year or the beginning of | | | | you're doing. |