Are you a business owner? Grab your wallet, because Obamacare and other "taxes" are looking for it.
As changes to Obamacare become effective, business owners are facing escalating tax rates. Nevertheless, prudence and good stewardship require you to look for strategies to (legally) minimize the damage at every turn.
For instance, according to a recent article on the Insurance West website, titled “Important Tax-Planning Tips for Business Owners In 2014,” retirement packages can decrease tax liabilities by deferring income. Accordingly, at the end of the business year, companies will be examining data to see if there are any tax savings available on defined contribution, benefit, cash balance and 401(k) plans.
The original article notes that gathering this data will allow business owners to make informed decisions about potentially accelerating deductions and deferring income into the next quarter.
Note: Compiling financial projections and reports is extremely important for proper tax planning.
The original article also suggests integrating personal tax planning into the company tax planning thereby allowing state income, real estate and mortgage taxes to offset business revenue.
Your business planning and estate planning attorney will be able to suggest solutions, These may include legitimate tax shifting by employing children, who can start a Roth IRA, along with the tax benefits of continuing education.
There also have been two tax benefit extenders passed by the Senate and the House which would extend provisions for businesses—bonus depreciation, generous donations for S corporations, smooth transitioning from C to S companies, and a $25,000 reduction on Section 179 expenses.
Next year the Affordable Care Act's employer mandate will go into effect for companies with more than 49 full-time employees. Appropriate health insurance for employees must be documented for compliance, and with this burden companies are looking into various tax options.
According to the original article, you need to integrate your estate planning into your corporate structure to reduce the size of your estate, and consequently business owners may consider giving shares to family members who are in a lower tax bracket.
An attorney experienced in business and estate planning can help you make the right strategic moves as the year comes to a close.
*H2O = Water
Remember: “An ounce of prevention is worth a pound of cure.” When making your financial, tax and estate plans, do not go it alone. Be sure to engage competent professional counsel.
For more information about estate planning in Overland Park, KS (and throughout the rest of Kansas and Missouri) and to download free tools to help you organize your estate, visit my estate planning website.
Reference: Insurance West (November 8, 2014) “Important Tax-Planning Tips for Business Owners In 2014”