Income and Deduction Strategies
Tax Planning for Your Small Business
Staying on top of tax planning throughout the year can help you make tax-savvy decisions at every turn. For example, should you buy or own your business car? Should you buy or lease equipment? Should you hire new employees or use independent contractors? Understanding the tax ramifications to your daily business decisions and planning accordingly throughout the year can save you money at tax time.
Employ tax strategies for:
- Income and deductions planning
- Opening or closing a business
- Running a sideline business
- Running multiple businesses
Also understand the impact that the alternative minimum tax (AMT) can have on your tax bill. This "shadow" tax system kicks in when business write-offs and other deductions help you lower your regular tax bill. Planning for regular taxes without factoring in the AMT can undermine your expected tax results.
Finally, face the fact that there are other taxes to deal with beyond federal income taxes. These include:
- State income taxes
- Employment taxes for staff
- Self-employment taxes for yourself
- Sales and use taxes
- Excise taxes
The scope of your tax responsibilities may seem great, but understanding is the first step to ensuring that you'll do what's needed to save money and stay out of trouble.
