Follow These 3 Savvy End-of-Year Tax Tips
Tuesday, October 4, 2016
There's an antidote to the end-of-the-year rush to stock up on business expenses.
Easy: Do a January-December swap.
As you approach the end of the year, be strategic about your income and expenses. You may want to wait until January 2 to deposit
Intermediate: Turn your LLC into a virtual S Corp.
If you operate your biz as an LLC, filing two simple forms could save you thousands. Let’s say your business is on track to earn $200,000 this year. Given your current structure, be prepared to cough up an extra $30,600 on top of your state and federal income tax -- because as an LLC, 100 percent of your earnings
Expert: Be creative with retirement plans.
Sure, SEP IRAs and solo 401(k)s are good retirement vehicles for the average entrepreneur, but if you really want to save big on taxes, consider setting up your own defined benefit and pension plan alongside a Safe Harbor 401(k). This helped a business owner I know reduce his tax bill on a million in earnings down to $400,000 in earnings. That other $600,000? More than $450,000 went into his personal retirement account. (His employees’ retirement accounts got the rest.) Work with your tax accountant and wealth adviser to set up one for yourself.
By Steph Wagner for Entrepreneur Magazine