All You Need to Know about Tax Planning for Business

Don't let business tax planning overwhelm you! At Thom Bookkeeping we can help keep you organized and develop tax planning strategies.

When it comes to tax planning for your business, it can get complicated and overwhelming. Between all the different types of taxes, estimated payments, timing income/expenses, deductions, and credits, there is certainly a lot to think about. Fortunately, you don’t have to do it alone. At Thom Bookkeeping, we are experts in business tax planning. We have helped many businesses plan their tax strategies with the end goal of reducing overall tax liability. We know that tax planning is an all year task and we are here to help. Read on to learn more about what is involved with business tax planning and how a bookkeeper can help.

Which Types of Taxes Does My Business Need to Pay?

When it comes to paying taxes as a business, there are a lot of different types of taxes owed each year. First, are income taxes. These are taxes that are owed on the profit. The tax will be paid differently based on the setup of the company. For example, partnerships pay income taxes on their own personal returns while LLCs file a partnership business tax return where members pay their share of the tax. At Thom Bookkeeping, we will help you determine how your income taxes will be paid based on your business model.

Another type of tax that your business might owe is a property tax. If your business owns real estate, you will have to pay a tax on that property. Excise taxes must also be paid by certain types of businesses. This tax includes fuel taxes, air transportation taxes, environmental taxes, and more. Thom Bookkeeping will help you determine if your business owes an excise tax.

Another type of tax is the self-employment tax. If you are a sole proprietor or a member of a partnership, this tax will cover your benefits for retirement, disability, social security, and Medicare. This tax is important because the owners are not employees, so these amounts are not coming out of paychecks. A business will also owe employment taxes. This covers Social Security, Medicare, federal income tax withholding, and federal unemployment. Some of these items will be paid partially by the employee. For example, Social Security is paid for half by the employee and half by the employer. Businesses have a lot of different taxes to keep track of. At Thom we will help you get the correct forms and file each type of tax that is required.

Estimated Tax Payments

Business owners must make estimated tax payments. Since the owners are not employees and do not get paychecks, there is no income tax withholding or self-employment tax withholding. It is required that business owners make tax payments throughout the year to make up for the lack of withholding. The tax payments are due on April 15th, July 15th, September 15th, and January 15th. At Thom Bookkeeping, we make sure that you stay on track and on time with your estimated tax payments.

Timing Income and Expenses

Another area where businesses need help with tax planning is determining the timing of income and expenses. During the fall, begin to think about how to plan your income and expenses to help save money on taxes. The goal of timing income and expenses is to prepay expenses while deferring income. At Thom Bookkeeping we can give you many different ideas about how to time your income and expenses to ultimately reduce your tax liability.

Deductions

Don't let business tax planning overwhelm you! At Thom Bookkeeping we can help keep you organized and develop tax planning strategies.
Photo by Leon Dewiwje on Unsplash

As a business owner, there are many deductions to include on your tax forms. First, you can deduct up to $500,000 on certain business property. You can also deduct things like business travel expenses, business use of your home, and business use of your car. In addition, charitable contributions can be deducted. Other areas for deductions include employees’ pay, retirement plans, rent expense, interest, and more! At Thom Bookkeepers we will review with you the list of potential deductions in order to save you as much money on your taxes as possible.

Credits

In addition to deductions, there are also some tax credits that businesses can get. Certain businesses can qualify for a health care tax credit. This is designed for companies with less than 25 employees. Businesses can also claim a work opportunity tax credit. This tax credit helps businesses who hire certain groups of people like veterans or people with disabilities.

Did you know that if your business pays for childcare expenses you could receive up to a $150,000 credit each year? If your business has just started a retirement plan and has less than 100 employees, you can get a credit worth 50% of the startup costs (up to $500 per year.) Businesses can also get a credit if they have expenses from research and development. Thom Bookkeepers will work to learn about the ins and outs of your business in order to find as many tax credits as possible. Tax credits are a great way to save money.

At Thom Bookkeepers, we know that taxes can be difficult and overwhelming. Our goal is to let you focus on running your business while we focus on your business tax planning strategies. We work with clients to help them understand the different types of taxes they owe from property taxes to income taxes. In addition, we help you to keep track of the timing of estimated tax payments. We also will seek out as many deductions and credits that we think you can use as a way to reduce your tax liability. Finally, we help you with the timing of end of year income and expenses as a way to reduce current year tax liabilities. For more information about the services we provide and how to get started working with us, contact Thom Bookkeeping today.

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