Tax Strategies for Business Owners Who Are Killing It

Are you killing it this year?

Then you should probably talk to a financial professional so that you don’t get killed by taxes. If you plan ahead, there are some steps you can take to create tax deductions and increase your after-tax income this year. Don’t let the IRS enjoy the fruits of your labors.

Earning high returns on your investments is great, but it is also important to keep in mind that tax savings is also money in your pocket. This isn’t so obvious, but the returns often vastly exceed what is possible on more traditional investments.

Need a few ideas?

Start up and fund a Defined Benefit Pension Plan

Business owners nowadays tend towards profit-sharing and 401(k) plans. I’m not sure why. These don’t allow for nearly as much tax-deductible contributions as a defined benefit pension. Public companies have shunned pensions in favor of 401(k) plans but they have a need to keep their expenses down as they have to answer to their shareholders. But for small business owners, why in the world would you be concerned about the “expense” of contributing to a pension for your own benefit? Business expenses are tax deductions!

A Self-Directed Defined Benefit Plan allow you to invest in Real Estate and Alternative Investments i.e. Private Placement Securities.

Cost Segregation Analysis.

I’m always amazed that so many real estate investors don’t know about this. A cost segregation study is a way to itemize the components that make up a real estate investment and depreciate them over their useful lives. A high percentage of the value of the real estate is made up of items that can be depreciated over shorter lifetimes. The result is accelerated depreciation.

Since depreciation is not an actual cash outlay, this means more money in your pocket right now. A cost segregation study can pay for itself many times over in tax savings. A cost segregation study could be the best investment you make all year.

Charitable Giving Strategies

Charitable Trusts and Charitable LLC are great ways to benefit charities and create tax deductions that offset your income. With a Charitable LLC, you are donating a membership interest in an LLC to a charity while maintaining the manager role of the LLC. This allows for more control of the investments than you would have with a Charitable Trust. Giving your money away is much less painful when you combine the charitable giving with a permanent life insurance policy designed to replace the donation.

This is not meant to be an all-inclusive list. Use the link to schedule some time with me to discuss your own unique circumstances.

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No Rendering of Advice: The financial content in this document is provided for your personal education. It is not intended for trading purposes, and cannot substitute for professional financial advice. Always seek the advice of a competent financial advisor with any questions you may have regarding a financial matter. Information in this document is not appropriate for the purposes of making a decision to carry out a transaction or trade nor does it provide any form of advice (investment, tax, or legal) amounting to investment advice, or make any recommendations regarding particular financial instruments, investments, or products.

The sole purpose of life insurance is for the death benefit protection. Any other benefit is ancillary.