Are you satisfied with the taxes you pay? Are you confident you’re taking advantage of every available break? Is your
tax advisor giving you proactive advice to
save on taxes? If you’re like most business owners and professionals, you’re
not satisfied with the taxes you pay. You’re
not
taking advantage of every legal deduction, credit, loophole, and
strategy. And you’re frustrated because your accountant isn’t giving you
proactive strategies and concepts to save tax. The good news is you
don’t have to feel that way. You just need a better plan. Read this
report to discover tax mistakes that cost
business
owners and professionals thousands, year after year after year. Then
call us at (470) 226-1442 to learn how to fix those mistakes.
- Failing to Plan
The first mistake is failing to plan. Planning
is the key to beating the IRS, legally. I don’t care how good your
accountant is with a stack of receipts on April 15. If you didn’t know
you could set up a Section 105 plan and write off your kid’s braces as a
business expense, there’s nothing you can do on April 15. You lose that
deduction forever! True tax planning gives you concepts and strategies
you need to minimize your taxes. In plain English, not legalese. Without
intimidating spreadsheets or endless “projections” that change every
time Congress decides to change the law. What should you do? When should
you do it? How should you do it? And tax planning gives you two more
valuable benefits. First, it’s the key to your financial defenses. As a
business owner, you have two ways to put cash in your pocket. Financial offense is making more. Financial defense
is spending less. Taxes are probably your biggest single expense. So it
makes sense to focus your financial defense where you spend the most.
And second, tax planning guarantees results. You can spend all
sorts of time, effort, and money promoting your business. But that can’t
guarantee results. Or you can set up a medical expense reimbursement
plan, deduct your daughter’s braces, and guarantee savings. We
like to start new client relationships with a comprehensive tax plan
that lets us start saving you money right away, long before we prepare
your first tax return.
- Overpaying Taxes
The second mistake is paying the federal and state governments too much in taxes
year after year! A whopping 97% of business owners overpay their taxes.
Most business owners do not realize there are many tax strategies that
would reduce their taxes…legally! Wonder where you would be if you had
all the money you paid the IRS & the state in income taxes for the
last 10 years? And check this out….The IRS says there are hundreds of
millionaires who pay $0 taxes eery year! If they aren’t paying taxes…why
should you? What’s the difference between millionaires who pay $0 tax
and you? The millionaires have a tax plan. They know exactly how to
handle their finances to maximize deductions and drop their taxes to $0!
It’s time to stop letting that money leak out of your pockets. Do you
think tax planning means “raising red flags”? Taking advantage of “gray
areas”? Being “aggressive” and hoping not to get audited? In fact, it
means nothing of the sort. True tax planning means proactively scouring
your business and finances for tax-saving opportunities. Asking
questions before you make financial decisions to avoid unpleasant
surprises. And taking advantage of every legal deduction, credit, and
loophole the law allows. Our tax-planning strategies are all
court-tested and IRS-approved. You’ll find that with true tax planning
on your side, you don’t need to raise red flags, shade into gray areas,
or be aggressive to keep more of what you earn.
- Wrong Entity
The
next mistake is choosing the wrong business entity. Most business
owners and professionals start out as sole proprietors, then go on to
establish a corporation or limited liability company. But which
corporation? A “C” corporation for employee benefits or an “S”
corporation for minimizing employment tax? Limited liability companies
can be even more complicated. That’s because you can choose whether to
pay tax as a sole proprietor, a partnership, a C-corporation, or an
S-corporation. Choosing the wrong entity can waste thousands in tax,
year after year, for as long as you operate your business. If you’re
operating as a sole proprietor when you could take advantage of an
S-corporation, for example, you’ll pay thousands more into a Social
Security system that you probably aren’t counting on to finance your
retirement. If you’re operating as an S-corporation, you might be losing
thousands in employee benefits you could deduct if you were a
C-corporation. You might even do best with more than one entity, like an
S-corporation to minimize employment taxes and a C-corporation
to maximize employee benefits. Complicated? You bet! We’ll evaluate your
business to see which entity makes the most sense for you now. And
we’ll keep evaluating your business as we work together to make sure you
have the best possible structure going forward.
- Wrong Retirement Plan
Choosing
the right retirement plan can be just as challenging as choosing the
right business entity. How much do you want to contribute for yourself?
How much can you afford to contribute for your employees? If you’re
looking to save more than the $5,500 limit for IRAs, you have four main
choices: Simplified Employee Pensions (“SEPs”), SIMPLE IRAs, 401ks, and
defined benefit plans.
- SEPs are easy to set up and administer. But will a SEP be enough for your needs?
- SIMPLE
IRAs are also easy to set up and administer. But will a SIMPLE let you
contribute as much as you’d like? What about employee contributions?
- 401ks
aren’t just for “big business” anymore. Should you consider an
“individual 401k” for yourself and your spouse? How much will a 401k
cost if you have employees?
- Defined benefit pension plans let
you guarantee up to $175,000 in annual retirement income. But defined
benefit plans have required annual contributions, and they’re harder to
manage. Will the benefits make sense for you?
We can guide you through the retirement plan jungle to choose the best plan for your needs.
- Missing Family Employment
The
fifth big mistake for many business owners is missing family
employment. Hiring your children or even your grandchildren can be a
great way to cut taxes on your income by shifting it to someone
who pays less. Then you can use those wages to pay for their private or
parochial school tuition, summer camp, college tuition, or anything
else. The minimum age for hiring a child is just seven years old. That
lets you get started saving early, and even help give them good work
habits. Their first $6,200 of earned income is taxed at zero. (That’s
because $6,200 is the 2014 standard deduction for a single taxpayer –
even if you claim them as your dependent.) We can help you determine how
to pay your child, how to document it, and even where to put the money
once you’ve paid them.
- Missing Health Care Strategies
Now let’s talk about health-care costs. Surveys used to show that taxes used to be
small business owners’ biggest concern. Now it’s rising health care
costs. If you pay for your own health insurance, you can deduct it as an
“adjustment to income” on Page 1 of Form 1040. If you itemize
deductions, you can deduct unreimbursed medical and dental expenses on
Schedule A, if they total more than 10% of your adjusted gross
income. But most of us don’t spend that much on healthcare, so we don’t
get full deductions for what we spend. What if there were a way to write
off medical bills as business expenses? There is, and it’s
called a Section 105 plan, or Medical Expense Reimbursement Plan. If you
qualify, you can write off just about any legitimate medical expense.
Health insurance, long-term care coverage, Medicare, and “Medigap”
insurance. Co-pays, deductibles, and prescriptions. Dental, vision, and
chiropractic care. Big-ticket expenses like braces for your kids’ teeth,
fertility treatments, and LASIK surgery. Even nonprescription
medications and medical supplies, like aspirin and cold remedies. The
best part is, this is money you’d spend anyway, whether you get a
deduction or not. You’re just moving it from a nondeductible place on
your return, to a deductible place. You’ll save income tax on whatever
you deduct. You may even save self-employment tax too. If a Section 105
plan won’t work, we can discuss Health Savings Accounts. These
arrangements combine a high-deductible health plan with a tax-free
savings account to cover unreimbursed costs. They give you much the same
benefit as the 105 plan, without quite the flexibility.
- Missing Home Office Expenses
Home
office expenses are probably the most misunderstood deduction in the
entire tax code. For years, taxpayers feared it raised an automatic
audit flag. But Congress has relaxed the rules, so now home offices
attract far less attention. Your home office qualifies as your principal
place of business if: 1) you use it “exclusively and regularly for
administrative or management activities of your trade or business”; and
2) “you have no other fixed location where you conduct substantial
administrative or management activities of your trade or business.” This
is true even if you have another office, so long as you don’t use it
more than occasionally for administrative or management activities.
Claiming a home office lets you deduct the “business use percentage” of
your mortgage interest or rent, property taxes, utilities, repairs,
insurance, garbage pickup, and security. You’ll get to depreciate part
of your purchase price. And claiming a home office even boosts your car
and truck deductions. That’s because it eliminates nondeductible
commuting miles for that business. We’ll help you determine if you
qualify for home office deduction – and if so, how to make the most of
it.
- Missing Car and Truck Expenses
Car
and truck expenses are easy to overlook. That’s because you can take a
standard mileage allowance (currently 56 cents/mile). But that allowance
is the same for all vehicles, no matter how big they are, how much they
cost, or how much gas they guzzle. Do you think every car on the road
costs 56 cents per mile to drive? It might surprise you to see how much
it really costs to operate your car. And it’s likely to be more than 56
cents per mile! If you’re taking the standard deduction for a car that
costs more than 56 cents/mile, you’re losing money every time you drive
for business. Every year, the American Automobile Association (“AAA”)
publishes a driving cost survey. For 2008, they found small sedans like
the Honda Civic cost 35.7 to 55.1 cents/mile. Medium-sized sedans like
the Toyota Camry cost 46.9 to 71.9 cents/mile. Large sedans like the
Chrysler 300 cost 54.8 to 85.8 cents/mile. SUVs like the Ford Explorer
cost 59.1 to 91.0 cents/mile. Minivans cost from 49.1 to 74.9
cents/mile. And that was with gas priced at just $2.94 per
gallon! If you’re taking the standard deduction now, you may be throwing
away savings you could take with the “actual expense” method. We can
walk you through both methods to see which saves you the most now, as
well as help make the right decision when it comes to buying or leasing a
new car for business.
- Missing Meals and Entertainment Expenses
Let’s
finish up with some fun deductions for meals and entertainment. The
basic rule is that you can deduct meals where you conduct a “bona fide”
business discussion. This means clients or patients, prospective clients
or patients, referral sources, and business or professional colleagues.
So let me ask you – when do you ever eat with someone who’s not a
client, prospect, referral source, or business colleague? If you’re in a
business like real estate, insurance, or investments, where you’re
constantly marketing yourself, the answer might be “never.” Be sure you
deduct every meal where you legitimately advance your business! You
don’t even need receipts for expenses under $75. You just need to record
the cost of the meal, the date of the meal, the place where it takes
place, the business purpose of your discussion, and your business
relationship with your guest. Do you ever entertain at home? Ever
discuss business when you do it? Are you deducting those meals, too?
There’s no requirement that you eat out. So don’t forget to deduct home
entertainment expenses too! You can even deduct entertainment expenses
if they take place directly before or after substantial, bona fide
discussion directly related to the active conduct of your business. You
can deduct the face value of tickets to sporting and theatrical events,
food and beverages, parking, taxes, and tips. We’ll help you make the
most of your deductible meals and entertainment so you don’t miss a
deductible dollar!
- The Biggest Mistake of All
Now
that you see how business owners miss out on tax breaks, let’s talk
about the biggest mistake of all. What mistake is that? The biggest
mistake of all is missing our tax planning service. Have you all heard
the saying “if you fail to plan, you plan to fail”? It’s a cliché
because it’s true. Fortunately, our planning service avoids the problem.
We offer true tax planning. We tell you what to do, when to do it, and
how to do it. Call us at 770-451-6330 for your “1040 Analysis.” We’ll
find the mistakes and missed opportunities that can cost you thousands –
then give you a plan for rescuing those lost dollars. We guarantee it
will be the best hour you ever spend on your taxes, or we’ll donate $50
in your name to your favorite charity. You have nothing to lose but
opportunity. So call us at 770-451-6330 and schedule your analysis
today!