From business expenditures to careful reserves, there are a diversity of approaches that business owners can utilize to reduce the share of their business income that can be taxed.
Four major factors a business should consider are:
Are we making smart purchases and investments?
Do we know which deductions we can legally make?
How do we avoid an audit?
How can we reduce our tax exposure?
Do our charitable contributions count?
Are we eligible for Federal Tax Credits?
To ensure that you are calculating your business taxes correctly, work with a tax preparation specialist or certified accountant throughout the year. A qualified advisor can outline the laws and regulations relevant to your strategic decision-making that will reduce your tax liability and ensure that your business receives every deduction, credit, or tax exemption possible.
I am available at your convenience to discuss these matters, I can be reached at JeffreyLevine.Solutions today.
Mastermind mentors and coaches are often necessary to encourage, support, guide and provide collaborative advice to help their mentee navigate smoothly their professional resources, networks, and leadership capabilities to realize the most results and ultimately profits from their business ventures.
High-quality mastermind mentors and coaches, although seemingly expensive bring a wealth of aid to an individual looking to best harness their responsibility levels to optimize successes in their primary objectives. A mastermind mentor considers your underlying motivations and via extensive evaluation processes aids the mentee to identify and correct deficiencies on both developmental and impersonal levels.
Relationships with mentors or coaches can provide some of the following underlying benefits to mentees:
A direct authority with inside expertise and experience that supports your industry’s vision
Confidence and character-building strategies that help you to be a better person
The ability to draw Higher salary opportunities via direct network building strategies
An educated ally who has your back no matter what
When evaluating a mentor or coach consider the following questions:
What are my short- and long-term mentoring needs?
How do I assess a mentor’s competencies and deficiencies?
How do I approach the mentor once I think they are a good fit?
How do I develop credibility in my respected field?
What are the takeaways to get the most from this mentoring relationship?
Mastermind mentors and coaches create support systems for their mentees often time eliminating guesswork, trial and error while providing honest feedback based on personal knowledge and industry trends. A mastermind mentor can provide insight into living a healthy lifestyle, dealing with difficult people, work/life balance, and of course growing your business.
If you would like to discuss your mentorship needs, how to take your business to the next level of revenues, or are looking for a profitable exit strategy, reach out to me to schedule a consultation at JeffreyLevine.Solutions today.
Business tax deductions work by lowering your taxable income, thereby lowering the amount of tax you owe toward your tax return. In order to claim the most deductions possible carefully review this list of deductions to see if they apply to your business, then reach out to your financial planner or tax consultant for clarity with accurate bookkeeping records.
Entrepreneurs, freelancers, and small businesses are allowed to write off a range of business expenses when filing their income tax. These expenses include:
- Startup Expenses
- Business associated travel
- Advertising and Promotion
- Business phone and internet
- Business Insurance
- Health Insurance premiums
- Home Office Expenses
- Office Supplies and related expenses
- Business Meals
- Work-related car use including maintenance
- Business Interest and Bank Fees
- Foreign Earned Income Exclusion
- Interest on Loans
- Real Estate Tax
- Professional Service and Consulting Fees
- Salaries, Benefits, Vacation Pay to employees
- Moving Expenses
- Home Energy Credits
- Client and Employee Entertainment
Personal Tax Deductions for Business Owners
Business owners are able to claim their qualified philanthropic deductions on Form 1040 Schedule A attachment.
Child and dependent care expenses
If you pay someone for childcare or a codependent member, you may be able to claim the Child and Dependent Care Credit. Refer to IRS Publication 503 regarding limits and form requirements.
Depending on the retirement plan, business owners who contribute only to their own retirement funds can claim the deduction on Schedule 1 attached to their Form 1040.
Health care expenses
Out-of-pocket medical costs, like co-pays and prescription costs, can be deducted like the health plan premium and should be itemized on Schedule A. A Self-employed business owner to itemize and deduct health insurance premiums for themselves, their spouse, and dependents.
How Can I Benefit From A 100 Percent Tax Deduction?
100% tax deductions are business expenses of which 100 percent of it can be claimed on the owners’ income taxes. These deductions can result from:
- Annual business phone bills
- Health premiums for the self-employed
- Up to $25 per person per year as gifts to employees and clients
- Office equipment, like computers, printers, and scanners
- Business travel and its associated costs, like car rentals, hotels, etc
- Furniture purchased entirely for office use in the year of purchase
What Do I Do Next?
Contact me to identify which deductions you can claim, which forms you require, timelines, deadlines, and anything else related to Financial Management and Tax Planning.
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Tax consultants are financial advisors who assist their clients with tax-related issues. They can help save lots of money for their clients including penalties and fees that otherwise would be paid to the government.
The most significant role of a tax consultant is to file the income tax return for the client. If filed late, the client is liable to pay penalties that can be more burdensome than the actual taxes. A consultant takes care of this and ensures that the returns are filed accurately and timely.
A tax consultant’s role is to identify, analyze, and solve problems in a way that realizes a return on investment for the client.
Tax consultants advise on business expansion plans, ways to deter or defer taxes, and can give recommendations as to how to alter income strategies to retain more preferable financial results. Many assume tax consultants can only be helpful during an audit as they are experts in dealing with those types of issues, but they are also versed in, financial trends, philanthropic options, and passive income strategies that help their clients retain wealth rather than planning to give it away. Tax consultants are the ‘right hands’ of many affluent professionals and multinational companies.
When seeking to hire a tax consultant pick one who has a proven track record of successes, has a broad range of domestic and international tax knowledge, and has experience with high net worth clients. I can be reached at JeffreyLevine.Solutions to discuss your tax matters upon request.
I have compiled a list of 20 important questions you should ask your tax planner or financial adviser. As there is no one size fits all template, consider these topics as they relate to your current situation. Keep in mind, this is nowhere near an all-inclusive list as these questions may not apply to you, or there may be questions here that don’t reflect your circumstances.
- How do I convert my Roth IRA and is the conversion reversible?
- Are there alternative ways to contribute to Roth accounts?
- How can I maximize my deductions?
- Do I pay taxes on trust accounts?
- Are my estate planning documents in order?
- What are my state’s laws and potential options to mitigate state, estate, or inheritance taxes?
- What strategy should I use for low cost-basis assets that stem from lifetime gifts or trusts?
- How much can I contribute yearly to a 529 account?
- How do I bequeath to charity?
- Does my company qualify for the 20% deduction for Qualified Business Income (QBI)?
- What are the current year’s highest marginal tax rates?
- Am I obligated to pay the Medicare investment income surtax and what are the limits?
- Am I responsible to pay Medicare payroll taxes and what are their limits?
- What are Child tax credits for this year?
- What are the standard deduction limits?
- Can I deduct my mortgage?
- Are State and local taxes (SALT) deductions capped?
- Can I claim deductions on Medical expenses?
- What are the limits on Estate/gift tax exemptions for the current year?
- What is the Annual gift tax exclusion amount for the current year?
As you may know, I am a qualified tax planner and financial advisor so I would be more than happy to discuss these questions with you in more detail at your convenience. Visit JeffreyLevine.Solutions to schedule a time that works for you via our contact page and let me educate you on your strategic wealth-building and tax planning options.
Section 179 of the IRS tax code permits businesses to subtract the entire purchase price of qualifying equipment and/or software purchased or financed during the tax year whether it is new or used from their gross income potentially providing the company with greater tax relief. The Section 179 deduction has also been incorporated in many of the recent Stimulus Acts and Congressional Tax Bills.
For most small businesses Section 179 allows for the entire cost of qualifying equipment to be eligible and written-off on the 2020 tax return (up to $1,040,000). Section 179 caps the total amount that can be written off at $1,040,000, and the equipment purchase price at $2,590,000 for the 2020 tax year. The deduction is eliminated once $3,630,000 in purchases is reached, an amount usually applicable to small and medium-sized businesses in a calendar year.
Does my business qualify for Section 179 Deductions?
All business entities that purchase, finance, and/or lease new or used business equipment and place it into service during tax year 2020 should qualify for the Section 179 deduction presuming they are within the spending limits. Although $1,040,000 of assets can be expensed that amount phases out dollar for dollar when $2,590,000 of qualified assets are placed in service and used for more than 50% of the time toward business purposes to qualify this deduction.
What Happened to Bonus Depreciation?
Bonus depreciation has been useful to qualifying large business entities but was not always available as a deduction every year while restricting the deduction to include only new equipment. As of this year not only is bonus depreciation available, but it now allows deductions of used inventory beyond the Section 179 spending caps at 100% until 2026.
Even businesses with net losses or no taxable profits still qualify to deduct some of their equipment costs and carry their losses forward under Section 179 and with Bonus Depreciation deductions.
When applying these provisions, Section 179 is generally taken first, followed by Bonus Depreciation – unless the business had no taxable profit, because the unprofitable business is allowed to carry the loss forward to future years.
For basic guidelines regarding when and how to apply these provisions, which forms are required, to evaluate your equipment purchases for deductibility, or to discuss your tax planning matters please refer to the contact page at JeffreyLevine.Solutions to schedule your free consultation. I am looking forward to hearing from you.