Business Entity Selection: The choice between an S-Corporation, C-Corporation, LLC, sole proprietorship, or partnership has significant tax implications. It's important to review this choice as the business evolves. For instance, S-Corporations can help save on self-employment taxes under certain conditions, but they come with their own set of requirements and limitations.

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Salary and Distribution Mix: For S-corporation shareholders, finding the right balance between salary and distributions can optimize tax liability, since distributions are not subject to self-employment taxes. However, the IRS requires the salary to be "reasonable" for the work performed, making it important to get this balance right.

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Tax-advantaged Benefits: Offering benefits such as retirement plans, health insurance, and other fringe benefits not only aids in employee retention and satisfaction but can also provide tax advantages for the business. Strategies such as using a 401(k) can defer taxes and reduce current taxable income.

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Maximize Retirement Contributions: Contributing to retirement accounts such as an IRA (Individual Retirement Account), Roth IRA, or employer-sponsored 401(k) can reduce taxable income and grow savings tax-free until retirement. For those who own their businesses, setting up a SEP-IRA, SIMPLE IRA, or Solo 401(k) could offer higher contribution limits.

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Health Savings Account (HSA): If you have a high-deductible health plan, contributing to an HSA allows you to pay for qualified medical expenses with pre-tax dollars, which can lower your taxable income. HSAs offer triple tax advantages: contributions are tax-deductible, the account balance grows tax-free, and withdrawals for qualified medical expenses are not taxed.

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Tax-Loss Harvesting: This strategy involves selling investments at a loss to offset capital gains tax liability on other investments. It can be an effective way to reduce taxes owed on investment income while rebalancing your portfolio.

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Educational Expenses: Contributing to a 529 plan for future educational expenses can offer tax breaks at the state level, and earnings grow tax-free if used for qualified education expenses. Some states offer deductions or credits for contributions.

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Charitable Contributions: Making charitable donations can provide a tax deduction if you itemize your deductions. Donating appreciated securities directly to a charity can be particularly tax-efficient, as it may allow you to avoid paying capital gains tax on the appreciation while still getting a tax deduction for the full market value.

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Estate Planning: Though often thought of in the context of after-death asset distribution, estate planning can also provide tax benefits during your lifetime, including through the strategic use of trusts and gifts to minimize estate taxes.

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Proactive Tax Planning: Our proactive advice and planning can lead to significant savings. Regular reviews of the business's financial and tax strategies can uncover opportunities for deductions, credits, and other strategies to minimize liabilities.

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For anyone uncertain about their current strategies or looking to ensure they are maximizing their tax advantages give us a call and we can provide a free consultation.