If you are an entrepreneur or considering starting a small business, your 1st consideration will be which business entity is right for you to meet your primary objectives which is to make profits while saving in taxes. Let’s review a few facts to assess which business entity could be right for you and what your tax planner may recommend for tax savings, asset protection, and retirement benefits. Yes, it does matter which entity you choose because that business model directly determines how much money you can save in net taxation by between ten and 40 percent and how much you can invest in an equitable retirement.
Let’s look at the top business entity preferences and how they can possibly benefit your objectives.
Those who receive income via 1099 are independent contractors or freelancers who must pay self-employment taxes in addition to regular income while representing themselves as both employee and employer. You do not have to have any type of corporate entity to be self-employed. Ask your planner based on your income tax bracket if you qualify for any pass-through deductions.
A typical S Corp is a pass-through entity that has no legal responsibility to pay taxes on its corporate income while all profits flow through to the proprietors, therefore the owners pay income taxes on their personal returns.
C Corp (Most Large Corporate Entities)
Pretty much any company that has gone public, or plans to go public, will likely be a C corp. C corp, entities are taxed separately from the shareholders. If your company intends to go public then this may be the entity for you as there are no restrictions on ownership or limits to the number of shareholders you can procure. C Corps offer a lower tax rate but also leaves the potential for “double taxation” on the corporation’s profits and when shareholders distribute their dividends.
A Limited Liability Company (LLC) can be file as a partnership, S corporation, or even sole proprietor. An LLC is a pass-through entity that isn’t required to pay federal income taxes, so the owners will report profits and losses on their personal federal tax returns. Understand as well that many states charge an annual fee for the LLC designation. An LLC’s owner can elect to tax it as a pass-through entity a qualified business income deduction could apply. Discuss with your tax planner what would be the best way to set up the LLC to allow for the benefits the entity has to offer.
Your tax planner will know best based on your business objectives and profession what corporate entity would be in your best interest to initially incorporate to maximize your earnings and ensure a profitable retirement.
If you don’t have a tax professional at your leisure, I am definitely willing to speak to you regarding your objectives.
Reach out to me at JeffreyLevine.Solutions anytime to schedule a free consultation on tax planning, beneficial retirement opportunities, and lucrative business exit strategies.
As leaders, this is an opportunity to build your team’s morale through motivation and encouragement. You must function in a way that highlights collective good and group interests. This method of leadership increases organizational performance as well as job performance and is the most required right now.
Being a transformational leader means you have to thoroughly consider how your team feels about themselves while assessing their newfound strengths and weaknesses. Surely you have evaluated their worth and respect for the company to maximum sustainability. If your method of inspiring stems from a charismatic expression of persuasiveness and mobilizes your team into progressive actions, you are more than like building a powerhouse of influential individuals who will be prepared and prone to dominate their industry in the upcoming months. Your company, product, or service will be established as a trustworthy business model that can withstand adversities.
The best thing you can do as a transformational leader is to operate from a foundation of mission and emergence in order to impress your teams with the goals and mantras that will engage them to accomplish specific objectives while operating from a place of influence. Your intellect and ability to relate to feedback will allow you to read individual behaviors and understand the needs of subordinates to not only show them appreciation by meeting their reasonable requirements above and beyond the protocol to get tasks done efficiently, effectively, and most of all enthusiastically. Such a leader will use the confidence of his people to obtain better overall results not just now but in the future.
To devise a leadership plan that will guide your organization’s mission and support your desire to succeed, reach out to Jeffrey Levine today for a free consultation to discuss your objectives.
Building a robust marketing approach to reach your brand’s desired population takes time so it is important to explore multiple avenues of outreach when executing your company’s strategic objectives, especially if you plan on selling sooner or later.
The right combination of digital and traditional marketing tactics can allow you to dramatically increase customer acquisition and retention as well as enhance branding opportunities to envelop more loyal supporters attracted to your products and services. As well, cutting out unnecessary expenses will also increase your bottom line profits making your company much more attractive to potential investors.
Offline or traditional marketing approaches combined with online or digital marketing strategies can provide inclusive solutions to reaching a broader range of customers. Basic traditional marketing methods can include direct mail, radio, or television advertising. These methods allow a business to highlight contact information, product lines, discounts, and much more to chosen audiences by familiarizing them with their brand or product lines repetitively. These methods are often more expensive than digital marketing options but often pay off greater in turn if geared toward the desired demographic.
Online marketing permits a company to increase visibility by diversifying its efforts between email funnels, site driving, blog conversion, social media integration, and search engine optimization. As well, many of a company’s internal and external operations can be outsourced for pennies on the dollar to established companies like administrative work, telecommunications, and HR. Investing in bookkeeping software and a reliable, cost-effective solution for credit card processing minimizes the impact of fees on your profits and provides you with simplified results that accurately determine cash flow and real profits. Your company can also make energy-efficient changes that decrease utility fees.
It is always easier and simpler to market and sell a business that has an effective marketing plan, is up to date with modern technology, isn’t over expensed, and has a simple accounting system. If your company requires tax support because you are pondering selling and want to avoid costly problems, I am available provide guidance with your tax planning and exit strategy objectives.
Your Dedicated Tax Planning Professional
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.
When you have a business, there needs to be a complete understanding of the tax authorities your entity is entitled to pay. Being uninformed can cost you time, money, or even your business. In addition to being accountable to the IRS for income taxes, your district, locality, county, and state agencies may require sales, property, payroll, local, excise, self-employment, and other specialty taxes like unemployment.”
Tax returns can be complicated for those with minimum experience, so it is extremely important to consult with a professional to prevent errors, keep costs low, and avoid the audit process.
Proper tax planning allows you and your team to consider quarterly and annual potential tax commitments and requirements, so the company claims the proper deductions that it is eligible for and prevents commingling. An informed business tax planner supports the bottom line so the company’s attention can be geared toward producing quality products, developing integral relationships, and implementing marketing strategies that boost and support the business’ objectives.
With the numerous tasks that come with operating a business, it’s not astonishing that business taxes aren’t at the top of the list of priorities for many proprietors. You can avoid making common tax mistakes by allowing a professional in tax planning to provide expertise and tax advice that prioritizes your company’s financial and compliance needs.
Contact me for your virtual or hands-on business tax consultation at JeffreyLevine.Solutions today!