You know the saying about death and taxes? “In this world nothing can be said to be certain, except death and taxes.” – Benjamin Franklin. So on that note, let’s take a few moments to make sure you are optimizing your tax situation. In working with your Wealth Advisor and your accountant, make sure the following items are being addressed. And before we address these items, it typically works best if your Wealth Advisor and your accountant are pro-actively working in conjunction with one another.
- Is your business utilizing the correctly entity? C corporation, limited liability company (LLC), partnership, S corporations, sole proprietorship…knowing the pros/cons of each, and then utilizing the correct one will start you down the correct path
- Are you utilizing depreciation to its fullest? Know which items are depreciable and for how long will allow you to pro-actively plan.
- What are the differences between and employee and an independent contractor? This issue has been in the headlines lately with the ride-sharing company, Uber. If the person is an employee, employers must then pay state and federal unemployment tax, social security tax and workers compensation premiums. When the person is an independent contractor, these are not required.
- When is it a repair vs. capitalization? When it is a repair expense, you can fully deduct it during the current tax year. If it is depreciated, the tax benefit is spread over a number of years. Again, know the difference and being able to plan is key.
- When are travel and meal expenses fully, partially or non-deductible? All of your meal expenses while traveling can be figured using either of methods below. Note that in general business meals are deductible at 50%
- Actual Cost – you must keep records
- Standard Meal Allowance – this is a figure set by the federal government
So if you have a good handle on these items, that’s great. If not, it’s important to address them with your Wealth Advisor and Accountant. Read Part 2 Here!
This information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Opinions expressed are those of the author and are not necessarily those of RJFS or Raymond James. All opinions are as of this date and are subject to change with out notice. Raymond James Financial Services, Inc. does not provide advice on tax or legal issues. These matters should be discussed with the appropriate professional.