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Tax Planning!

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Tax Planning!
October 17, 2024
Author: NCH

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As we’re getting closer to the end of the year, we need to start tax planning.  If you have your own business, or own rental properties, tax planning can be a critical piece of building wealth.
 
I just got off the phone with a gentleman in Pennsylvania.  He explained that he’s a Veteran with a construction company.  Last year his business made a net profit of $100k.  Operating as a sole proprietor, he was subject to state, federal, and social security and Medicare (self-employment tax).  Operating as a sole prop, this business owner had to pay $15,300 in social security and Medicare tax.
 
If he set up an LLC taxed as an S-Corp, filing form 1120S, he could have taken a small reasonable salary of $30,000, taken the rest as a K-1 Distibution, and we would have saved $10,000 in taxes.  Naturally, I asked, “who’s doing your taxes and how much did you pay?”  John explained his CPA charges him $75 per hour, and his bill was about $500…  John ended up getting bad advice.  John thought he had saved money, but poor guidance cost him over $10,000!
 
That was the tip of the iceberg.  Additionally, his cheap CPA did not explain the home office deduction, expenses for his F350 Dually, paying the children, or anything else.  Most accounting professionals will simply prepare and file an accurate return, based on the information you provide...  Rarely do these “professionals” provide guidance.
 
We cannot go backward for money you’ve already made, but from the date of incorporation (LLC) moving forward, you’ll get these tax benefits.  Not to mention, John is 900% more likely to be audited:  he’s filing a schedule C to itemize expenses.  Filing as an S-Corp, or LLC taxed as an S-Corp, the audit risk is almost ZERO.
 
If you have a business, starting a business, or buying rental properties, be sure to speak with your tax professional.  The end of October or early November is a great time to start working with your tax professional.  An ounce of prevention is worth a pound of cure!
 

With NCH, the state’s top business formation service, you can register your LLC in Nevada quickly and easily. Our specialists will help you choose the right entity for your company and understand why an LLC in Nevada is your best option. We’ll assist you with all necessary Nevada LLC forms, including the vital Articles of Organization, and help you comply with state regulations. In addition, we offer expert assistance with tax compliance, credit building, and payroll management. Schedule a private consultation to explore effective solutions to minimize tax liabilities and protect your wealth. Start unleashing your LLC’s full potential today with NCH. Schedule a consultation with Adam Kintigh today!

DISCLAIMER: The above material has been prepared for informational purposes only, containing opinions of the provider, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. Please consider consulting tax, legal, and accounting advisors before engaging in any transaction.

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