We all want to know what we can do to pay less taxes right? But who has the time to go through the 74,000+ pages in the tax law to learn what exactly it is that we can do to make it happen? Basically no one, except the people who dedicate their careers to doing just that (tax advisors/accountants).
Before you take your documents and spreadsheets to your tax advisor this coming tax season, start using these strategies in your daily life so when it comes time to pay up, you’ll be pleasantly surprised how small your bill is compared to last year!
When you pay for things your business needs to run, who is paying – you or your business? This is the type of situation that needs to be kept up with year round to ensure you’re either being reimbursed by your business or the company is paying outright. Otherwise you’re missing out on valuable savings that do add up after the year is over. Then your tax advisor will help you determine which forms you need to keep track of these in a legal and organized manner.
Receiving money from a business you own
The money you receive or earn from your business will have an impact on taxes, whether this is a salary, dividends/distributions, reimbursements, etc. Having a tax strategy ensures you take this money in the best way possible throughout the entire year.
For example if you pay yourself a salary, this should be paid on a set schedule just like any other job would be, including withheld taxes. Same with dividends (often paid quarterly and not usually the same amount).
When you have meeting with individuals such as business partners, vendors, or your various advisors, the discussion that occurs probably will have an impact on your taxes. It’s good practice to record these in meeting minutes to support your deductions and investments.
Other activities that will affect taxes that should be discussed with your tax advisor include reinvesting money into a business you own, and buying & selling investments (when and what kinds are good “tax shelters”).