Qualified Retirement Plan – Do you offer a Retirement Plan? If not consider this. Did you know that the IRS provides a credit on a business tax return for starting a new plan? Also contributions to employee accounts (including yours) are tax deductible for the business.
Business Structure– The Self Employment Tax, the most despised tax of all self-employed business owners. This tax seems to creep up every tax season, only to bite Business Owners at the end of their tax return as one of the last line items. No matter what your personal deductions are, the self-employment tax remains. The key is how you structure your business. Depending on your business net income, your growth projections, it may make sense to reorganize your business in such a way that you reduce your wages (i.e. your Self Employment Tax) and instead start receiving a dividend by forming an LLC that is taxed as an S Corp.
Roth Conversion – Slower year for the business? Consider taking any money in your Traditional IRA and converting it to the Roth. Yes you will pay taxes now, but it could save you a lifetime of taxes at retirement.
Deduction Stacking – Anticipate a boom for your business? Consider maximizing your personal deductions in that year in order to help offset income which will keep you from entering a higher tax bracket.
Profit Sharing Plan – Contributions made to employees (including you) are a business tax deduction. Meaning you could be amplifying your retirement savings, and paying less business income tax. Most clients we work with see the cost of employer contributions far outweighed by the value they see contributed to their personal account and the business tax savings (and let’s not forget less in taxes on the personal side if that money were in the form of a cash bonus).
Health Insurance Premiums – Self Employed? Well do not forget that your health insurance premiums are deductible. Many small business owners forget this fact. If married, the premiums your spouse may be paying to their employer group policy could be more than if you got a policy and are able to deduct the premiums on a policy you establish.
Section 199A Pass-Through Deduction – Make sure your accountant is up-to-date on the new tax laws impacting business that have their income pass-through to the owners personal tax return. The new tax can possibly give you a 20% income deduction on this pass-through income.
Hire Contractors – Need some help around the office or job site? Perhaps you can bring on contract help versus a new employee. This will allow you to avoid paying FICA taxes.
Hire Family – Uncle Sam is kind to businesses when it comes to wages paid to family members. You do not need to pay federal unemployment taxes if you hire your spouse or parents. Also if your children work for you, you may not have to withhold income taxes and Social Security. Of course, you must follow child labor laws and pay reasonable wages.