A few days ago I published an article about 5 steps you could take to reduce your taxes.   A couple of clients said that article was aimed at individuals, so how about an article for the small business owner.   So I agreed and here we go…..

1. Establish and maintain a good bookkeeping system or hire a bookkeeper.  Far and above anything else, good bookkeeping will reduce your tax liability.    Being able to identify and properly record all of business income and expenses will reduce your tax liability and give you peace of mind if you are ever audited.
2. Make sure you select the right operating entity for your business – LLC, Sole Proprietorship, Partnership, S Corp or C Corp.   Each has its own advantages and disadvantages.   Choose wisely.
3. Hire your family…especially college age children.   (See the next 2 steps)
4. Establish an Educational Assistance Plan (EAP).   You can help outset the cost of college by establishing an EAP for your employees (see Step 3).  The EAP could reimburse them for cost of classes, books etc and you get to write it off as a legitimate business expense.
5. Establish a Medical Expense Reimbursement Plan (MERP).   The MERP allows your employees to be reimbursement for medical expenses that they ordinarily could not write. (Limitations apply depending upon operating entity and dollar amounts reimbursed).
6. Establish a Retirement Plan.   Self-Employed Pension Plans (SEP), 401(k), Roth 401(k) are all available to you as a business owner.  Again certain limitations apply.

Talk with me or your accountant about these 6 steps and see how many you can apply as soon as possible to reduce any future tax liability.

As usual, if I can help, please feel free to email me or give me a call.