Tax Planning For Business Owners
Taxes are a major part of doing business, but it’s important to keep in mind that taxes are not one-size-fits-all. There are many different types of businesses, each with its own unique tax situation. Each year, there are also changes to personal tax rates and adjustments to business tax credits and deductions. In this article, we’ll discuss some general strategies for planning ahead when it comes to your business’ tax obligations.
Business tax planning is a year-round process.
Tax planning is a year-round process. You should be thinking about tax issues from the time you start your business, through its growth and maturity, to its eventual sale or liquidation.
Tax planning can be especially important for new businesses because of the so-called “momentum concept”–that is, if you are in a higher tax bracket when you start your business than when it becomes profitable (or vice versa), the difference in rates can have long-term effects on the amount of income that will flow through to your personal return each year.
You can often reduce your taxes by changing the way you do business.
You can often reduce your taxes by changing the way you do business. Examples include:
- Changing from a sole proprietorship to a corporation or partnership. This is one of the most common ways for businesses to save money on their taxes, because corporations and partnerships don’t pay tax at the individual level, as sole proprietorships do. If you’re thinking about making this change, though, be sure that it