Small Business Tax Planning Services
What Does a Tax Expert Advisor do for you?.
A professional tax advisor helps you to minimize your tax liability and capitalize on tax deductions, a tax consultant may be the way to go. With more expertise than standard tax preparers, tax consultants can help with tax planning, inheritance issues, charitable giving and other complex tax situations. Often, these advisors have training in tax law or accounting. Fees vary, depending on the scope of work and the skill and experience of the tax consultant.
Tax Planning Strategies
Any successful tax planning strategy centers around three themes; reducing income, increasing deductions and utilization of the lower tax rates available.
Review and Write off any Bad Debts
As you are entitled to a deduction in the year your write off a bad debt, identifying bad debtors and writing them off is an easy, cost effective strategy and should be done on a regular basis. However, in order to receive the deduction, there must be no prospect of recovering the outstanding debt and if it is later recovered, it must be included as assessable income.
Review Timing of your Invoices
Whilst it is always a good idea to prepare and send out interim invoices for work partially completed, care should be taken especially if an interim invoice is going to be raised close to 30 June and the work will be completed early July. In this scenario, it may be prudent from a tax perspective to invoice for the completed job in July (or, January for calendar years), (and have the income assessed in the following financial year) rather than have a part of the income assessed in the current financial year.
Review your Inventory at Year End
Many businesses fail to review their inventory, in particular for either obsolete or damaged items. These items generally have significantly lower values than current or undamaged stock, yet they are still valued at their full value. By revaluing these items, you can create a further deduction for your business.
President Biden Changes to the tax laws
Biden would raise the corporate tax rate to 28% from 21%, restore the top individual tax rate to 39.6% from 37%, tax capital gains as ordinary income and at death for very high earners, limit deductions for high earners, and subject wages above $400,000 to the Social Security payroll tax, according to the Committee for a Responsible Federal Budget. Here are looks at some specific plans.
Biden would scrap preferential treatment of capital gains and dividends for higher earners, and raise taxes on inheritance. Capital gains and dividends would be taxed as ordinary income, at a rate of 39.6% for individuals and couples earning more than $1 million.
Long-term capital gains are taxed currently at a top rate of 20% and earned income is taxed at a top rate of 37%..
Under Biden’s proposal, earnings between $137,700 and $400,000 would be exempt, creating a “doughnut hole” of nontaxable wages. Earnings above $400,000 would be subject to the 12.4% tax.
Repeal elements of the Tax Cuts and Jobs Act (TCJA) for high-income filers. The act lowered the top rate on ordinary income and introduced a 20% deduction on qualified business income.
For filers with more than $400,000 of taxable income, the Biden tax plan would restore the previous top rate of 39.6%.
In dollar terms, households in the top 1% of America would face an average tax increase of roughly $300,000 per year, compared with a $260 per year increase for those in the middle, according to the Tax Policy Center, affiliated with the Urban Institute and Brookings.
