Why don't business owner take advantage of every tax deduction allowed in the IRS code? Also, why do so man tax professionals overlook some of the business tax deductions or strategies that could save you thousands?
Easy answer: The Internal Revenue Code has over 40,000 pages of "easy reading" tax laws. Even the sharpest accountants and consultants find it difficult to follow in order to maximize deductions while avoiding hassle by the IRS.
So in the current economy that we are in, here is the most common one I see that gets missed. Remember that these are strategies and are not always as simple as black and white. Do some research and find out all of the rules before implementing.
1. HIRE YOUR KIDS. I have read so many articles about business owners paying high self employment taxes. This just helps a bit. As business owners and parents, we spend a lot of money on our kids. Whether it be gas, college tuition, food, movies, etc... It is not cheap to have a child. If they perform work for your business, they now have their own income to pay for those things. The basic tax benefit is shifting income from your higher tax bracket to their lower tax bracket. If you are self employed and your child is under 18 years old, you don't have to pay Social Security or Medicare payroll taxes on their wages. This can amount to thousands of tax savings per child per year. Also remember earned income below the standard deduction is not subect to tax. Do your research though before you implement something like this because the child must be able to use that money AS THEY WISH. You can not tell them what to spend it on and you can not just take it back from them either.
Check your balance, review recent transactions and pay your bill on the go.
2 Responses
ESEN TRANSLATION
Mar 11, 2010
Owner
STRATEGIC FINANCIAL
Mar 11, 2010
Owner/President
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