Business Tax Planning
Tax planning is the process of looking at various tax options to determine when, whether, and how to conduct business and personal transactions to reduce or eliminate tax liability.
At Williamson's Tax & Financial Services, we look at tax planning as an ongoing process for which we connect with our business clients throughout the year, just not at the end of the year. This allows us to take full advantage of the provisions, credits and deductions that are legally available to you.
We also offer an "Open Door Policy" that encourages our business clients to reach out to us during the year, not just at the end of the year.
Tax Planning Strategies
Countless tax planning strategies are available to small business owners. Some are aimed at the owner's individual tax situation and some at the business itself, but regardless of how simple or how complex a tax strategy is, it will be based on structuring the strategy to pursue one or more of these often overlapping goals:
- Reducing the amount of taxable income
- Lowering your tax rate
- Controlling the time when the tax must be paid
- Claiming any available tax credits
- Controlling the effects of the Alternative Minimum Tax
- Avoiding the most common tax planning mistakes
Tax breaks that businesses are eligible for are constantly changing, and it’s hard for a small business owner to stay on top of all the changes and updates. Let the professionals at Williamson's Tax & Financial Services help you reduce or limit your tax liability, and claim the most available tax credits.
Contact Us to learn more about tax planning for your business.
Check out some of our small business tax planning tips:
- Tip 1: Sock it Away Year ‘Round
Waiting until April to come up with what you owe in small business taxes is a bad idea. It not only puts a strain on your finances, but you might not be able to pay it all at once, and then you're wrangling with a payment plan with the IRS. Which is not fun.
Instead, try putting aside about 20% of your gross revenues. Put it in a high-interest savings account or money market account so you’re not tempted to dip into it, and so it will make a little money for you until tax time. Then, when that tax bill shows up in April, you can pay it without breaking a sweat, especially if you haven't been making quarterly tax payments.
Tip 2: Maximize Your Home Office Deductions
The standard method and the simplified option. The standard method requires you to calculate your actual home office expenses.
- The standard method and the simplified option. The standard method requires you to calculate your actual home office expenses.
- The simplified option lets you multiply your home's office square footage, but your office must not be larger than 300 square feet and the IRS only allows you to claim $5 per square foot or a maximum deduction of $1,500.
You can also deduct any miles you put on your car. The standard mileage rate is the easiest because it requires minimal record-keeping. The standard mileage rate is 54 cents per mile for 2016 (53.5 cents per mile for 2017).
Tip 3: Make Any Key Purchases Before the End of 2017
If you are going to have a lot of cash on hand at the end of the year, you can make major purchases for your business to minimize your tax exposure. Pay some regular vendors in advance, purchase any equipment needed, inventory or office supplies. The goal is to reduce the amount of cash on hand.
Tip 4: Stay on Top of Your 1099s and W-2s
You are required by law to send all 1099s for contractors and W-2s to employees by January 31, 2017. Delaying this could get you penalized by the IRS, and your employees and vendors need this paperwork to complete their taxes. Make sure you have up-to-date W9 and W2 forms on all contractors and employees so in January you have what you need to submit the forms, either online or print them and mail them yourself.