Prepare Your Small Business for Obama’s Tax HikesPresident Obama wants to end the Bush-era tax cuts for families making more than $250,000 a year. But small business advocates see it as a direct attack. It’s a debate that’s likely to heat up in the months ahead, especially with the 2012 election campaigns gearing up soon.
In the meantime, what can small business owners do to maximize their after-tax income? Strategic tax planning could benefit small business owners next year, when new tax laws are likely to pinch the pennies in your pocket.
"Tax laws for businesses are more complicated than for individuals,” says Erin Hollis, a director at Tax Services for Strategic Tax Advisors (STA). “And, many small business owners are unaware of how they too can benefit from the same tax planning strategies which large corporations have employed to legitimately minimize their future tax obligations."
With that in mind, Hollis is offering 10 questions every small business owner should ask themselves to determine how strategic tax planning could benefit them. I’ve listed them here. Go ahead and invest 10 minutes in this self-test. It could save you thousands of dollars.
- Do you pay yourself as an employee, a business owner, or both? Do you know the difference? And, what tax implications were considered in making this decision?
- Has your tax preparer and/or attorney ever discussed the business and personal financial benefits available to you from creating a strategic tax plan?
- Why did you choose the present legal structure of the company and what tax benefits do you gain from this legal structure compared to other alternatives?
- Do you have a tax-advantaged plan for your future exit from your business?
- What is your contingency plan for the business, if you are forced to exit involuntarily (e.g., death or disability)?
- How much money do you need to retire comfortably and what part will your business play in funding that future retirement?
- When was the last time your estate plan was updated?
- What changes in assets, intentions, or tax laws have occurred since you last reviewed your retirement plan and estate plan?
- How will the value of your business affect the estate taxes due upon your death?
- Has your tax advisor discussed with you current tax incentives applicable to your business, as well as those proposed in the new budget bill?
"If business owners can't answer all ten questions with absolute certainty, then it would be wise to seek an independent review of their tax-related circumstances,” Hollis says. “This is the only way to be certain that the present needs of the business, and the future benefits to the family, are fully taken into account."
Check out this video on strategic tax planning if you want to learn more about the concept: