In 2017 the corporate tax rate was 35 percent, but most American companies paid far less than that. The Tax Cuts and Jobs Act created a single flat rate of 21 percent, but even that number is higher than studies indicate corporations are paying. What corporations actually pay, their effective tax rate, is estimated to be between 13 and 19 percent for federal taxes, based on multiple studies. That effective tax rate is far lower than the rate many other small businesses pay every year. The tax code is full of opportunities for businesses to save money — if they know how to leverage the tax law for their benefit. The problem is that most tax preparers are concerned only with what they see in the rearview window, without being able to look forward. Strategic tax planning from Financial Gravity gives business owners of any size the tools to legally paying less in taxes.
Facebook has been able to boast about many accomplishments, from their acquisition of virtual reality technology company Oculus VR, Inc., to the first time they hosted over one billion users in one day. For the company, it’s likely none of these accomplishments will be as well regarded as one related to their finances. In 2016 Facebook anticipated that their effective tax rate would fall from 40 percent to about 27 percent for the year. With the federal corporate tax rate at 35 percent at the time, this rate would have been considerably lower. Facebook serves as just one example of how large corporations use a strategic tax plan to lower their taxes, saving thousands of dollars every year. How did Facebook, along with other major companies, pay a tax rate lower than your business? The answer is strategic tax planning.
How Do They Do It? Facebook Paid a Lower Tax Rate Than Your Business
Effective Tax Rates
It’s natural that as companies begin to make more money they start thinking more carefully about their taxes. It’s one reason why major corporations employ teams of experts that work together to take advantage of every tax-reduction strategy allowed by the tax code.
While Facebook has declined to comment on the exact strategies used to lower its tax rate, the effective tax rate reported by companies to the SEC is often higher than what the company actually pays. This means, of course, that the 27 percent effective tax rate Facebook expected to pay might be higher than what they actually paid. Some tax experts have estimated that when Facebook was reporting a 40 percent tax rate, they were likely playing closer to 13 percent.
Strategic Tax Planning
Facebook is hardly the only major U.S. company that works to find ways to lower its tax rate. A vast number of companies on the S&P 500 had an effective tax rate of 20 percent or lower, and at least a few of the companies paid essentially zero in taxes. In fact, many of the tax strategies that Facebook and other large companies used have become commonplace among corporations of their size. Just because the big companies use them, however, doesn’t mean these strategies aren’t available to smaller companies.
Facebook being able to lower their effective tax rate is impressive, but it’s not impossible for smaller companies to replicate. It all starts with a strategic tax reduction plan — the Tax Blueprint® from Financial Gravity.
Businesses of all sizes should think of a strategic tax plan as standard operating procedure. This is a business fundamental that far too many businesses are lacking. Businesses want to maximize money coming in, of course, as well as minimize money going out. The easiest way to increase profit is to cut unnecessary expenses, such as overpaying taxes. Strategic tax planning helps you keep more of the money you make.
Make The Tax Code Work For You
It might sound dramatic, but a Tax Blueprint® could change your life. Saving thousands of dollars in taxes every year means more capital that you can put back into growing your business. That additional business growth could be what you need to change the trajectory of your business. Every minute you wait to implement your strategic tax plan means more of your hard-earned money is draining away, being overpaid in taxes you don’t legally, ethically, or morally owe. A quick, free assessment is all it takes to start your Tax Blueprint® process.
Companies like Facebook know how to make the tax code work for them rather than against them. We use the IRS Tax Code comprehensively to ensure you pay only what you must. With your Tax Blueprint in hand, you’ll see exactly how the tax code can work for you and your specific business. Each and every tax-reduction strategy we employ in your Tax Blueprint is sourced and referenced directly by the IRS Tax Code. You’ll see firsthand that every strategy is legal, ethical, and moral. With your implementation plans highlighted and summarized, you can be confident that the savings are real.
Maintaining Your Strategic Tax Plan
Beyond your Tax Blueprint, Financial Gravity can help you implement and maintain your strategic tax plan through our Tax Operating System®. Designed to fit any budget and circumstance, our suite of solutions help you save money via strategic tax reduction. Additionally, you can count on access to our advisors, annual tax-planning assistance, ongoing newsletter, and educational materials.
The truth is that you are likely paying too much in taxes, perhaps thousands more than the law requires. Even if you employ a CPA, many do not know how to take advantage of this level of tax planning because they weren’t trained to do so. To leverage the benefits of the tax code, you need to be proactive and you need to have a plan. Through our Tax Blueprint®, Financial Gravity can provide you with a clear, proactive, strategic tax plan that is customized to your business. Contact us today to schedule your free assessment!
Before the Tax Cuts and Jobs Act of 2017, the top corporate rate for taxes was 35 percent. This rate was one of the world’s highest federal tax rates, which makes it no surprise that GOP lawmakers made lowering overall taxes a priority. While the new law lowers taxes overall, its main focus is on cutting corporate taxes. After the new tax law, there is a single flat rate of 21 percent. Even with corporate tax rates set, America’s biggest companies employ strategies that enable them to pay a lower tax rate. Strategic tax planning isn’t only for large corporations; businesses of any size can navigate the tax code to legally, ethically, and morally pay less taxes.
There is a common misperception that strategic tax planning is reserved for the ultra-wealthy, a luxury that only they could afford—but nothing could be further from the truth. In fact, that whole idea that strategic tax planning is only for big companies is a tax myth. While it is true that big companies can afford a slew of lawyers all sitting around a table, brainstorming ways to pay less taxes, small business owners can get the same benefits.
The good news is that the new tax law, the Tax Cuts and Jobs Act, includes lower tax brackets and a near doubling of the standard deduction. However, there is also much uncertainty looming regarding the new tax law, as several provisions within the Tax Cuts and Jobs Act (TCJA) remain unclear. Changes to income, confusion regarding itemized deductions for state and local taxes, and other unclear provisions have already caused some taxpayers complications. The new tax law makes strategic tax planning for 2018 more important than ever.
Paying your taxes isn’t something that is optional, but one area where you do have a choice is how you decide to approach your tax deductions. After determining your total income, adding up all the sources of income and subtracting any adjustments to income, you will need to decide which deduction option to choose.
Business taxes don’t happen just once a year, and neither should strategic tax planning. Everyone likes to save money, and you could start saving right away with a Tax Blueprint® from Financial Gravity. Think of your taxes like an illness. You wouldn’t wait to go to the doctor if you were sick, so why are you waiting to start your strategic tax reduction planning?
Now is the Time for Strategic Tax Reduction Planning
Your cure starts with a diagnosis from a Financial Gravity team member to discover what’s causing your tax pain. From there we can create your strategic tax plan, in effect filling your prescription and making a plan to relieve your pain. Once you have your diagnosis, your Tax Blueprint®, we can implement changes that will save you money. The tax code is long, complicated, and overall, not a fun thing to read. Strategic tax planning could be the step you need to take in order to save money in taxes every year.
Proactive Tax Planning
Are you confident that you are taking advantage of every tax break available? The majority of CPAs do not do any proactive training, in fact, most work in reverse. They work historically, completing tax returns that only reflect where you have been, instead of where you want to be going. If you are only looking behind you, then you aren’t planning for the future.
There is no one-size-fits-all approach when it comes to strategic tax planning, which is why the Tax Blueprint® from Financial Gravity is customized specifically to you and your business. The easiest way to increase the profit for your business is to minimize the money going out, ensuring that you aren’t spending any money unnecessarily. While some taxes are necessary, it’s likely that your business is paying more than what is legally, ethically, or morally required, simply because most tax advisors aren’t trained to think proactively. The good news is that you don’t need to wait to start realizing these savings. Every minute you wait means more of hard earned money spent overpaying taxes.
Start Saving Now
For most small business owners, taxes are your single biggest expense. That expense is likely to only grow bigger if you don’t have a sound strategic tax plan in place. If your current accountant, bookkeeper, or tax preparer has not given you at least one idea that saves you a minimum of $1000 in taxes every year, then now is the time for strategic tax reduction planning from Financial Gravity.
We offer strategies that can be implemented right away, from writing off your swimming pool, renting your house to yourself, or hiring your own children. These are surprisingly simple strategies that small business owners can legally use to reduce their taxes. Some strategies will serve you better when you reach a certain threshold, but that’s exactly why your Tax Blueprint® is created specifically for your business. All business owners need a solid strategic tax plan, and we can start working with business owners in their first year of business.
Following our strategies will save you money without increasing your risk for audit. When you receive your Tax Blueprint® you will see every tax reduction strategy we employ sourced and referenced directly to the IRS Tax Code. Along with the tax savings, you will also see implementation plans that are highlighted and summarized so you can be confident that the savings are real and the strategies are legal, ethical, and moral.
Business owners are told a lot of myths surrounding taxes, myths that could be holding them back from bigger business growth. We separate the wheat from the chaff, breaking down the myths that could be sabotaging your business. A Strategic Tax Plan is a true “business fundamental,” and odds are you don’t have one.
Note Changes in Tax Law
The tax code exists to help you pay less in taxes, but you have to know how to utilize it. That’s where strategic tax reduction planning from Financial Gravity comes in. We comprehensively use the IRS Tax Code to ensure you only pay what you must. When you sign up for our Tax Blueprint® you receive a strategic tax reduction plan that is customized specifically to you and your business. The sources of tax savings, directly from the IRS Code, are summarized in your plan so you can be confident that the savings are real.
Don’t procrastinate your strategic tax reduction planning. Start planning now to see the maximum tax benefits. Financial Gravity knows that to leverage the benefits of the tax code you have to be proactive. Contact us today to get your own strategic tax plan and see why it is truly a business fundamental!
Keeping a shoebox full of wadded-up receipts and tax documents and then rushing to your tax preparer at the last moment isn’t going to give you the tax results that you want. No matter how much you dread them, taxes aren’t something you can think about just once a year. Failure to plan is planning to fail. That phrase applies to many aspects of your life, including your taxes. Instead of crossing your fingers and hoping for the best, you can avoid tax-time failure with the right planning. Decide now what you want and how to plan for 2018 taxes.
When you hear the words “proactive tax planning,” it’s tempting to think of a team of high-powered accountants, financial advisors and tax lawyers working for a large company in a high-rise building somewhere. These setups are known as a “Family Office,” generally utilized by wealthy individuals, families, and entrepreneurs with a net worth of at least $30 million. Read more
Why outsource/offshore in an America first economy?
There is not a day that goes by that you don’t use a car, use an electronic device or wear clothes that are manufactured internationally. In the tax and accounting business putting numbers in boxes is like a white collar manufacturing business. In many professional service industries, portions of what is done for the client, patient and customers fall into this broad definition of manufacturing. These tasks, if possible can be handled offshore. But shouldn’t we be looking to bring these jobs to the US not take them offshore? Read on…
Years ago, when major companies outsourced service there was a backlash due to communication barrier and inability to solve problems, and the purpose of service is to communicate effectively and solve problems. We would not outsource all of our services. We think this is best kept domestic. But email requests, tracking down answers, process following, and many other functions of our business can be offshored, which in essence will improve service.
3. Intelligence and design
When you buy a new iPhone it used to say designed in Cupertino on the box, that is because they are highlighting that the most important part of the phone, the intelligence that goes into the engineering and design was domestic, no one cares that the high volume manufacturing is done in countries most people can’t find on a map, because the phone would be substantially more expensive and isn’t our goal as a country to have the highest standard of living, that comes from the best paying, highest value jobs as the prize? The US is winning that game. We are NOT outsourcing the engineering or design of the Tax Blueprint®, the Tax Operating System®, Bookkeeping with Purpose ®, Tax Annual Review™, the Wealth Blueprint™, Wealth Annual Review™, etc. We are offshoring putting numbers in boxes, see #1. We are outsourcing the manufacturing of the ‘disc’, the music and movie on the disc (the content), which is the highest value, we are keeping domestically.
4. Domestic Employee Costs are rising, and Domestic Employee Performance is dropping.
Blame it on the millennials, blame in on the lowest unemployment in decades, blame it on entitlement, then why in this case does not matter for me the business owner, that must operate in the environment that exists, not the one I wished existed, what matters is how we serve our clients with the highest level of service with our current environment. Until customers except the excuse, that ‘good help is hard to find’ when we make mistakes or are too slow, or we are too expensive, then we must adapt. So, we are outsourcing #1 and keeping #2 & #3.
5. Lower Taxes
This is our primary goal and we will use technology and systems to be the best. We have no intention of offshoring tax planning, but we are working on making our software Artificial Intelligence-based, this will increase speed, increase accuracy and lower costs. This falls under #3.
6. Numbers that help you run your business and life
This is something we are working diligently on. A real-time dashboard that shows you how you are doing in your business. We want our domestic team focused on helping you interpret the numbers so that you can improve business efficiency and lower your taxes (and other costs, a LOT of services coming in this area). We will be offshoring the production parts of the business wherever we can. See #1.
7. It’s like having elves
Although some of the offshoring happens during domestic hours as well.
We get documents and information in during Pacific – Eastern times. But, our offshore employees are likely on the opposite side of the planet. While we are sleeping the numbers are being put in boxes, we wake up and the work is ready to be triple checked. Many services, like Design Pickle, 99 Designs, Upwork and others like them are great services and work gets done while you sleep, as well.
8. The Robots are coming
Technology is growing at a pace never seen in human history. In the last couple of years, you have heard about driverless cars, in the next two years you will see a driverless car and shortly you will be using one. A driverless car is substantially more complex than putting numbers in boxes. Repetitive tasks are being demonetized, tax preparation and bookkeeping fall into this category. We are moving the company in the direction of #2, #3, #5 and #6. Because if we don’t we will be replaced by Artificial Intelligence and Robots.
9. The tax division is being subsidized
Every business unit needs to stand on its own, the Tax division will be profitable this year due to adding technology, improving internal processes and doing #1. Either we double our fees or manage costs through systems, efficiency, and offshoring, we are choosing the later. Our clients expect more from us than other tax firms, and they expect more at the same prices they pay other accounting firms, offshoring allows us to build something that does not exist anywhere else.
10. One check vs triple check
The new process is our partner puts numbers in boxes, they have a CPA or equivalent (they are only CPA’s in this country, the initials are trademarked and given out by a domestic association/business). Then we look, once again, a third check, once again we are outsourcing #1 and keeping #2, #3, #5 and #6.
Here is a list of the biggest data breaches in the 21st century (http://bit.ly/2DG9FIF). Notice something? They are ALL domestic. The technology we are using is much better than a vast majority of accountants.
12. Security part 2
The nesting doll approach – The biggest data breaches were data extracted from a database or the biggest ‘doll’. But data and documents stored inside a software program, that is stored inside another software program, that is in a world-class cloud service creates a big barrier to nefarious entry. Easier to hack the above mega corporations than us.
13. Security part 3
All your data is in the cloud, every major company has moved to cloud-based computing, the average tax prep, and accounting office is tragically behind technologically, most store all your data on a PC or a client/server environment which is connected directly to the internet, our approach is safer than what most our clients are doing in many other parts of their lives.
14. Security part 4
Your data does not ‘leave’ the country for the numbers to be put into boxes, there are plenty of software options to allow access to software across borders without the data leaving the borders. Also, our partner has no USB ports, no printers and all employees have to put phones in lockers before putting on their headset and logging in to their workstation, data is safer than virtually any business you are working with domestically.
15. Security part 5 – Your wallet
The most amount of risk in your life is in your wallet. The magnet strip on the back of your credit card has more information that a thief can use to impact your life in a negative way. Most people hand their card out several times a day without a thought but are distressed at much safer scenarios.
16. Amazon Effect
We all compete with Amazon now. Not because we are all in the same business, but because they have raised the bar on speed, efficiency, and cost. They have set a standard that things can be cheaper, better and faster at the same time. Amazon is entering every market they think they can improve speed, cost, and quality. If you don’t improve those three things they will get into your business and do it for you.
17. Planned Obsolescence
Intel is famous for starting on the next two generations of chip design as they are releasing the designs they currently have. The 386 and 486 chips were being worked on as the 286 was being released. They competed with their own product because if they didn’t other chip makers like AMD or TI would. We are working at putting the current old business model out of business before a competitor does it to us.
18. Economic/Political shift
In the last couple of years, we have shifted from stagnant employment to a statistical full employment level. Also tightening immigration controls are reducing the labor force further. I’ll let CNBC and Fox News fight over the impact, and whether it is good or bad for the future, but business people must adapt to the real world, not the hoped-for or should be world. We must make business decisions on the way things are not the way things ought to be. That is what we are doing, you should too.
19. America first!?
We are putting America first by focusing our efforts. #5 & #6 will put millions of dollars back into the hands of those that most deserve it, the American small business owner and entrepreneur.
As you can see outsourcing/offshoring is a critical key to our ability to serve you better. As you can also see it was not a haphazard decision, it was thoughtful and it every stakeholder and YOU in mind.
Member Office Locations
Alabama Arkansas Arizona California Colorado Connecticut Delaware Florida Georgia Hawaii Iowa Illinois Indiana Kansas Kentucky Louisiana Massachusetts Maryland Michigan Missouri Montana North Carolina New Jersey New York Ohio Oklahoma Pennsylvania South Carolina Tennessee Texas Utah Virginia Washington Wisconsin Wyoming