Ways to reduce my small business tax burden in USA

[amicrazy90]

Hi all.

I need ideas on how I can reduce my tax burden. I have a 2 year old small business with me and another individual. We are both 50% owners. We are currently an LLC. We have no employees. The company will only hire contractors, and has no plans to add any more partners.

I’ve been told a good way to lower taxes is to convert to an S Corp. to avoid paying payroll tax. I plan on doing that the first j of the year.

I’m in enrolling both parties in individual 401(k) for this year which will make a decent dent.

What other clever things have you done to lower your taxes?

 

[chasingvisions]

@amicrazy90 Step 1: Elect the most optimal taxing structure as recommended by your CPA.

Step 2: Buy anything (including real estate) that makes sense to buy for your business. Do not buy things just for the write-off. Better to just pay the tax and keep the cash than to buy something you don't need.

That's it. That's about all you can do.

 

[vikkik]

@chasingvisions Don't buy reale statein an S Corp though, that could lead to a mess.

 

[chasingvisions]

@vikkik Agreed. Listen to your accountant on how to do it. But the tax benefits all come back to the same place in the end.

 

[peyneust]

@amicrazy90 There are tons of great books on this subject. One I got quite a lot from is called The Tax and Legal Playbook by Mark J Kohler.

 

[amicrazy90]

@peyneust I’ll give it a read. Thank you

 

[peyneust]

@amicrazy90 Another, Lower Your Taxes - BIG TIME, by Sandy Botkin. You'll find others, put em' on your nightstand, desk, bathroom magazine holder etc. Enjoy.

 

[amicrazy90]

@peyneust Awesome . Thank you

 

[christophe]

@amicrazy90 Mark J Kohler also has a great YouTube channel.

 

[edenworkshops]

@peyneust Just bought it! Hope it has good tips!

 

[peyneust]

@edenworkshops

 

[peterjames]

@amicrazy90 Hire a CPA and let them deal with this. Focus on growing your business. What's better- focusing on saving 5-10% on taxes on your existing income or grow your business and income 20-30%? You'll be far better off simply focusing on growth. Not only do you have more income, but you will be growing the value of your asset (business). Tax efficiencies (beyond hiring an expert to do it for you) are a waste of time, focus on your core business- way more upside there.

 

[fanofjesus333]

@peterjames Not enough people focus on this. You've got to make the money in the first place, and that's the real reward. Tax efficiencies are for when you're already making the money- hiding profits doesn't work until you're already raking in the profits.

 

[corr]

@peterjames Losing 50% of your profit is vey painful... We as business owners all know how hard it is to run a biz and make money.
If I could get down to 30% I'd feel a heck of a lot better...

 

[peterjames]

@corr That's why you pay the tax expert to do it for you. No one I know, myself included, pay anywhere near 50% in the NE US. Your effective rate would most likely be 20-35% or lower with deductions.

 

[corr]

@peterjames I have a tax expert and the lowest we can ever get it down to is 40-45%...

 

[peterjames]

@corr I'm going to assume non-US then, somewhere in the EU- where those rates make more sense.

 

[corr]

@peterjames Colorado, a business friendly state!

 

[carlvo]

@amicrazy90 Buy the building you operate out of. Put it in a separate LLC and pay rent to yourself. Depreciate the building and write off the interest.

 

[james3404]

@carlvo Then Sell the said building in 10 years and cry to the accountant when you have to pay heavy ordinary taxes on the recapture of that depreciation