Tax Knowledge for Business Owners

In a business, if an individual wants to save money then it is important to be tax-savvy. When you are a business leader, you focus on three core aspects; building a team, finding customers, and perfecting the products/services. This leads to compromise with other important aspects like tax optimization. It might not seem like a big deal in the beginning but when the tax season comes, every business owner wishes that he had done his research. Proper research helps you understand that a lot of business decisions have tax implications.

Understand the Quirks

Local as well as federal taxes have numerous quirks attached to them. Paying complete attention to these quirks is important to save money in the future. A lot of people search ‘civil lawyer Alexandria” on Google in order to find a lawyer that can assist the taxpaying problems. But before you do so, it is important to keep in mind these four areas for every tax-savvy businessperson.

  1. Retirement Savings – If a wage earner contributes to the retirement plan, he can get a deduction of up to the annual limit. However, when a business owner sets up the retirement plan, he can contribute as well as deduct much more than that. For a lot of business owners, this kind of deduction can result in tens of thousands of tax savings easily.
  2. World of Deductions – There are a lot of expenses with substantial amounts that can be qualified for a tax deduction and you may not even know it. According to the IRS, the expenses should be necessary and ordinary in order to be tax-deductible for the business. Depending on your business field an expense is considered to be ordinary like a car, cell phone, and meals if you buy those for the sales team.
  3. Employees Vs. Contractors: Are you paying the workers as your contractors or employees? The answer to this question will help you decide the tax deduction. If you are paying them as contractors, it will be tax-deductible and deem cheaper. Although always remember to meet the definition laid out by the IRS and act according to it to derive maximum benefits.
  4. S Corps Vs. C Corps – You can choose to be taxed like an S corporation if you are registered as an LLC. It will help you avoid the payment to the federal corporate income tax. Your credits, income, deductions, and losses are passed on to the shareholders. This can help you save thousands of dollars over the years.

“It’s not what you make, it’s what you take home” – This is a tax mantra that makes every sense for a business owner. If you have an opportunity to pay fewer taxes, why pay more? Find the best civil lawyer Alexandria can provide and make sure you get all the possible tax benefits in the upcoming tax season. Langevin Lawyers take pride in how they work. This law firm not only has the best estate layer Alexandria has ever seen but also works towards all kinds of legal concerns.