Tax Saving Strategies for Businesses

Copyright Robert Lee Riley, all rights reserved, do not duplicate without permission of author.

...read and understand Tax Saving Strategies for Individuals first.

...obtain from me a copy of my Tax Data Organizer for a detailed list of tax saving ideas.

...IRA contributions are due April 15th.  SEP/Keogh and Qualified Plan Contributions are due by the due date of the extension.

...deduct your office in home expenses based upon the percent of floor space, including storage. The IRS has relaxed the home office rules; it is no longer a red flag.

...if you have self employment income, consider forming a corporation to limit your liability and save taxes. S Corps (pass through entities) often are the preferred choice for businesses that expect to have fewer than 75 shareholders and one class of stock. C Corps are  popular for deducting medical insurance.

...an S Corp may help your marketability especially if you work for large corporate clients because it avoids personnel and tax costs to the employer.

...Limited Liability Corps are popular for businesses with gross receipts less than $250,000.

...my Tax Data Organizer has a more detailed description of the different types of corporations.

...purchase equipment and take advantage of bonus depreciation allowances.

...if self employed, hire your children.

...avoid or defer income recognition to another tax year. Defer year end bonuses and/or delay your year end  billings.

...use your debit or credit cards, and checks, for all expenditures, avoid the use of out of pocket cash because receipts are often lost.

...post your debit and charge card expense statements, and cancelled checks to Quicken each month. Also post any out of pocket cash expenditures.

...the IRS will expect you to be able to reconcile your bank deposits to the gross income shown on your tax return. If you cannot, the statute of limitations is extended to seven years.

...pay your state FTB estimated tax payment in December - it is due in January but you get a current year deduction.

...generally, avoid the SEP-IRA in favor of the QRP Qualified Retirement Plan (but see below). The contributions are very limited and withdrawals do not receive the favorable capital gain and forward averaging treatments.

...the SEP-IRA is a popular choice if you have numerous employees and wish to avoid the paper work and make small pension plan contributions.

...if you have a corporate QRP pension plan, you can borrow from the plan tax free as long as you pay the money back as a term loan.

...if your spouse works in your business, cancel your medical insurance and sign on as a joint recipient on your spouses' policy - then have the business pay the premiums. Thus, 100% of the cost is deductible as a business employee benefit.

...to be continued as time permits, check back.
Cell: 415 308-0678
Fax: 415 704-3238


Lee@RileyAccounting.net


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Sausalito, CA 94965


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Robert Lee Riley CPA, MBA-tax
Riley
Accounting