Tax Tips For Investors & Entrepreneurs

11/20/2013

  1. Set up a corporation: The tax rate on the first $25,000 of retained profits is only 22%. You can set up a medical expense reimbursement plan for yourself without including employees. Your corporation can own and claim depreciation deductions on your car. Even if you're in business part-time, you can set up a tax sheltered savings plan.

  2. Work a swap of products or services at every opportunity. Both you and the other guy will save a lot in taxes. Neither of you will have as much recorded profit on a swap transaction. Hence less tax.

  3. Avoid employees: Have your work done by self-employed, independent contractors and save on Social Security taxes, unemployment taxes, and Workman s Compensation Insurance.

  4. If you carry and inventory use the L.I.F.O. (Last-in First-out) method of valuing your inventory. Your nondeductible inventory will consist of the oldest items bought before price increases, and you will be deducting the highest priced materials of merchandise.

  5. If you are trying to sell stock or are going to invest in a small corporation, ask your tax advisor about the special Section 1224 Election. If the corporation goes under, the investor can deduct up to $50,000 against ordinary income and if it succeeds he gets a capital gain when he sells out.

  6. To nail down a capital gain you must hold the property more than six months, not just six months. That one extra day can make a big difference.

  7. Keep your eye on the new Pension Legislation being worked on in Congress. It's shaping up as a real bonanza for small business owners. Not only so you save on Federal Income Taxes, but you may save on Social Security Taxes, and you will usually save on State or City income taxes. Earnings on pension plan savings can accumulate free of tax until you draw them out.

  8. Check with the local Federal Unemployment Office about hiring workers under the W.I.N. Program. You can get a tax credit of 20% of a qualified employees first years wages. It's a real steal.

  9. You can accumulate up to $100,000 of profits (after paying a 22% tax on the first $25,000 per year) in a corporation and pay a tax on only half of the accumulated amount (by capital gains route) if you liquidate instead of paying yourself a salary of dividends. This is a very attractive pitch for investors in short term (5-10 years) ventures.

  10. When in doubt, DEDUCT. The probability of an audit for small businesses with less than $30,000 is very low. Chances are your deduction will go through and even if it doesn't it will only cost you the tax you would have paid plus 6% of that tax. Just be sure you have a valid reason for the deduction. But, don t get caught on fraud charges, it isn't worth it.

Related Articles

How to Start a Profitable Home-Based Business

11/30/2013

In these days, it's becoming increasingly difficult to make ends meet with just one source of income. Thus, more and more people are investigating the possibilities of starting their own extra-income business.

How to Get Free Medical (and Dental) Care

11/24/2013

Once you have formed your own non-profit organization, you merely place in your corporate charter the provision that medical care be paid by the organization of which you are a member.

How to Prepare a Business Plan that Guarantees Big Profits

12/2/2013

Success in business comes as a result of planning. You have to have a detailed, written plan that shows you what the ultimate goal is, the reason for the goal, and each milestone that must be passed in order to reach your goal.

Home Business Guide to Easy Money

11/30/2013

Because tens of thousands of people all across America want to know how they can work at home and earn enough money to run a household, there is a special need for this report. Today the need for women to work out of the home is stronger than ever.

Home-Based Businesses for Fun and Profit

11/15/2013

Your Guide to Setting Up Your Own Business at Home

Handling Impossible Customers

7/17/2013

There isn't a day that goes by that I don't hear another small business owners complaining about some of the customers they have to do business with. And some of them REALLY are legitimate complaints.

DOL Small Business Handbook

7/16/2013

This Handbook on the basic regulations and related services administered by the Department of Labor (DOL) is designed primarily for small businesses in general industry. It begins with a general overview of DOL requirements.

21 Steps to Home Business Success

8/9/2013

Twenty million home-based businesses will be in operation by 1999, according to Link Resource's 1995 National Work-at Home Survey. All around the country, people who want more control over their lives are starting home businesses

Selecting the Right Business Name

7/18/2013

Ask 500 people already in business how they decided upon their business name and you will get 500 different answers. Everyone has a story behind how they chose their own business name.

Incorporating a Small Business

7/17/2013

Prepared by the Office of the General Counsel U.S. Small Business Administration

Terms of Use

All content provided on this website is for general informational purposes only. No warranty is expressed or implied. Your use of this website is subject to our Terms of Use.