For the most part, business owners are good about tracking their expenses. There are the “no-brainers” like rent, cell phone, and office supplies. But this is about those business deductions that are out there, but seldom taken advantage of.
If you are incorporated or have an LLC, you are required by law each year to have some kind of annual meeting. For larger businesses, especially publicly traded businesses, annual meetings are a big deal.
Some of the most elaborate annual meetings are held by Wal-Mart and Berkshire Hathaway.
Each year these companies spend millions of dollars on bringing their shareholders in, entertaining them, conducting the meeting, and much more. These meetings are not cheap, and the costs can add up quick.
More importantly, these costs are tax deductible. You don’t think Wal-Mart just eats those expenses do you?
That means, the same is true for your business. So if your annual meeting takes place on a cruise, at Disney, or some other fun vacation spot, then so be it. And you need to be writing off a good portion of that. We can help you figure out what is deductible, and how to save money with this meeting.
Paying Your Kids a Wage
If you have children over the age of 7, and supporting them financially (meaning they don’t have full-time jobs yet) then you should be paying them a wage from your business.
The wages you pay them (unlike gifts of money) are deductible to your business. Just like any other employee, what you pay them is payroll expense.
Plus, the first $6,350 you pay them each year, is not taxable to them. So you get to take a deduction, and they don’t pay any tax.
This is because they get a standard deduction on their tax return, that allows them to earn $6,350 tax free.
More parents should be implementing this strategy. Just make sure the kids really do some work, and obey the child labor laws.
Do this one if you have kids, it is a no-brainer…
Leasing your Automobile
If you drive less than 15K miles each year, and you use your car some for work, you should always consider leasing that car rather than buying it.
Leases have much better tax saving benefits during the life of the car. Purchased cars normally are restricted to the “luxury auto limits” of depreciation. Usually meaning you can only deduct a small portion of the car payments.
When you sell the car, you can realize the rest of the losses, but that means you have to take it all at once, possibly in a year that you don’t need it.
I realize that some like to build “equity” in a car, but with depreciating assets, concepts like that are fleeting. Trust me, save the tax and lease the car.
We can provide you an analysis of “Lease vs Buy” if you need it and can quantify the benefits of each.
14 Day Rental Strategy
So this last one is a little strange. I am showing it to you to prove to you there are many tax strategies out there you have never heard of. And using a firm like ours will bring you both simple and complex strategies, leaving no “tax stone” un-turned.
The IRS has a rule that if you rent your home to someone (not family or your business) for less than 15 days, then the income you received from the rental is not taxable.
It was meant to allow you a short rental period, without all the hassle of tracking taxable income or depreciating your home.
Using this rule, you can save some money by sharing with a friend (again, not a family member). They also need to own a business.
Then it simple, each of you rent your home to the other and their business. You can hold staff meetings or some event. The cost of these rental facilities (i.e. your homes) is deductible to your businesses.
However, as long as you rent to each other 14 days or less, none of the income is taxable to your personally. Another totally free deduction!
Of course you rent to each other for the same amount so the money is a wash, and there are a few other things to get in place to do it. Of course, we can show you how to execute it perfectly.
These are just 4 of the dozens of ideas we implement with clients. If you are tired of paying so much tax, maybe you need to give us a call. Saving money on your tax bill is easy once you have an accountant that is focused on it.