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Tax Ideas for the Small Business

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  • Tax Ideas for the Small Business

    Considering the results of last night I thought a tax discussion might be helpfull...

    I have come to learn that there is no greater help than the experience found on this forum

    Here are a few that I have that could be of help to someone...

    If you purchase a tool and it is less then $300 keep the reciept and you can write it of all at one time, If over $300 you can straight line depreciate the tool and get a percentage of the cost written off each year over the life of the tool.

    What if any are your states tax advantages for how your business is formed do you know? Incorporation Vs. LLC Vs. Nothing

    I know a guy that has two companies (He is a one man operation). In a nutshell here is what he does... His plumbing company does not purchase equipment or tools his other company purchases them and leases them back to his plumbing business.... This has multiple benifits tax and is also a good asset protection move...

    Just a few thoughts for the comming tax hike

    Last edited by OkieBill; 11-05-2008, 08:42 AM.

  • #2
    Re: Tax Ideas for the Small Business

    i have have a few friends that are business owners and they are genius's when it comes to tax loop holes. i'm going through the school of hard knocks with my business my accountant is pretty darn good. i need to learn more
    Clark County Plumbing And Drain


    • #3
      Re: Tax Ideas for the Small Business

      We are just all screwed as business owners now


      • #4
        Re: Tax Ideas for the Small Business

        I believe we have some challenges ahead of us as small business owners...

        There are things we can do to help our cause, now we just have to find them.

        If you have a good accountant that is a big plus ( I still do my own accounting at least for this year).


        • #5
          Re: Tax Ideas for the Small Business

          How about Income shelters that come out of your pre tax income ( Remove it from your bottom line at the end of the year) ... There are certain investments that qualify for this and could make all the difference if you are on the bottom edge of a high tax bracket and want to bump yourself down...


          • #6
            Re: Tax Ideas for the Small Business

            Just completely minimize what you pay yourself. Hurts you on the tail end of social security but that system will be bankrupt by that time anyway.
            Northern Kentucky Plumbers Twitter Feed | Plumbing Videos


            • #7
              Re: Tax Ideas for the Small Business

              you can pay your kids up to $5000 without them being required to file income taxes.


              • #8
                Re: Tax Ideas for the Small Business

                I just wanted to put things in perspective.
                A couple making $250,000.00/yr and who file 'married filing jointly' will pay
                $61,700 in federal income tax,00.html. That brings their income down to $188,300.
                If you live in California or D.C. I think you pay another 9.3% or $17,511. So take home is $170,789. Not to mention any local taxes or amt.

                And I've got a feeling 170 grand in CA is just barely a house note for 1 month.

                $250,000 all of a sudden is not sounding very rich. And yet, anyone who makes that is in the top 5% of wage earners who pay over 54% of all federal income taxes.

                Our new CIC wants to soak them for some "chump change" as he so eloquently stated. I guess he is feeling kind of high and mighty since he has cleared $600,000,000.00 as a result of rejecting public financing.

                I don't guess he'll be sending any of that back anytime soon
                "Man will do many things to get himself loved, he will do all things to get himself envied." Mark Twain


                • #9
                  Re: Tax Ideas for the Small Business

                  There are many tax advantages for a small business owner. Off the bat most of your life becomes deductable. Here are some legal strategies. If you are willing to cheat, it is pretty easy to get away with things much more agressive than this, but it is cheating. And if the moral argument isn't enough, it's illegal as well. I'm sure there are other legal things I haven't been smart enough to figure out.

                  Once you start making some money, incorporate. S-corp if you are a single owner, llc is for partnerships. Pay yourself a believable salary and take the rest of the profit in dividends. You don't pay payroll tax on dividends, and if you are self employed you pay self-employment tax on it instead of payroll tax. This does decrease your theoretical eventual social security benefit.

                  Own your buiding yourself and lease it back to your company at the higest believeable rent you can charge yourself without putting the company in the red; you don't pay payroll tax on rent. Same downside as above if you believe you will ever collect social security under the current contribution based benefit structure. May add a layer of liability protection for the building if you are ever sued. I hadn't ever thought about doing it with equipment as mentioned in an earlier post as that stuff pales in comparison to the building (at least around here), but that would be a good way to go if you are small enough you don't have a building.

                  If you are not married and you can truly trust your lady (or any 'arms length' person), there are interesting things you can do by transferring ownership of the company from time to time. This applies to real estate you live in that has appreciated a bunch as well; you can step up your basis and avoid capital gains when you eventually sell. But, you have really got to trust them.

                  Home office/shop rented to company is a mixed bag... it's a pain to do it, it does result in some savings by making a portion of your expenses in the house deductable and some of your purchase price depreciable, but it also puts the same percentage of your home you rent to the company subject to capital gains tax and recapture of depreciation when you sell it. If you expect your house to appreciate a bunch this might not be a good way to go.

                  Mostly shop around for a good accountant.
                  Last edited by Ace Sewer; 11-07-2008, 01:10 AM.
                  This is my reminder to myself that no good will ever come from discussing politics or religion with anyone, ever.