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strategic tax planning

For business owners, lower taxes are likely a gift that you’d like to see under the tree. Thankfully, it’s not too late to add it to your holiday wish list. It even has a name, strategic tax planning. Strategic tax planning is a gift that won’t fade once the newness wears off, and it’s one that continues to give to your business year after year. Strategic tax planning could save your business $20,000, $50,000, even $100,000 in taxes every year. This year stop wasting money on taxes you don’t owe. Instead, give yourself the gift of strategic tax planning, and get rewarded year after year with lower taxes.

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tax professional

Finding tax and investment advisors who give you proactive advice for saving on your taxes probably feels like an elusive search. The truth is that not every tax professional, in fact, the majority of them, do not do any proactive planning. Most CPAs are not even trained to do this level of tax planning. If you’re ready to leverage the benefits of the tax code and stop spending money unnecessarily, then you need a tax professional who understands business owners. At Financial Gravity we are versed in the minutiae of the tax laws, and we can help you keep more of your money with strategic tax planning.   

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Charitable Giving

There are many advantages to giving to charity. While doing good is in and of itself its own reward, it also probably makes you feel good. Reaping the tax benefits from that charitable giving has also been a nice perk. While taxes might not have been at the forefront of your mind when providing assistance to others, the tax deduction for charitable contributions has typically helped shave money off your tax bill if you itemize instead of taking the standard deduction. Under the new Tax Cuts and Jobs Act, the deduction for donations is unchanged, but the bar is higher with the nearly doubled-standard deduction. ‘Tis the season for charitable giving, so make sure you do it correctly and stay on the nice list.

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tax professional

You might think of spring as “tax season,” but that is a misnomer for small business owners. In reality, tax season should be thought of as tax filing season. Yes, it’s important to get your tax return filed on time, but the need for tax planning is really an omnipresent one. Filing your taxes is merely the end of a year-long cycle where you should see results of everything that happened in the past year. There are hundreds of opportunities to minimize your taxes throughout the year, but it starts now with a proactive tax strategy. If you want to pay less on your taxes, you need a tax professional who works for you year round.

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Black Friday Sale on Taxes

You’ve likely heard of a little thing called Black Friday. The day after Thanksgiving is also known as the biggest shopping day in the United States. Stores offer major markdowns, mind-blowing doorbusters, and rock-bottom prices. If you’re a die-hard bargain hunter who goes to great lengths to score the best deals and deepest discounts, Black Friday is where you shine. People stand in line hours before the stores are opened, to grab the bargains of the year. It’s clear that Americans like to save money where we can. So, what if there were a Black Friday sale on taxes? There is, and it’s called strategic tax planning.

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tax professional

This scenario will probably sound familiar. Your accountant takes the information you provide to them, they put the right numbers into the right boxes on the right forms and get them filed by the right deadline. It’s like a checklist: check, check, check, and check. Once they have completed your tax return, they move along to the next return checklist and start the process over again. Now, there is value in recording history, and it is very important to do it correctly, but at the end of the day, you want to know more than just how much you owe. You want to know how to pay less in taxes each and every year. That is the very reason why your tax professional should do more than just taxes.

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Legend holds that in 1494, an Italian friar named Luca Pacioli was sitting under an apple tree when an apple bounced off his head. In a flash of insight, he invented the “double-entry bookkeeping” system where each entry has a corresponding and opposite entry to a different account. Those entries, called debits and credits, help accountants avoid headaches — if the debits and credits don’t balance, there’s a mistake somewhere. (Some of you may be thinking that was Sir Isaac Newton with the apple inventing gravity, but this is our story and we’re sticking to it.)

Double-entry bookkeeping has ruled accounting for over 500 years. We see it everywhere today, including in our tax code. Revenue flows in, balanced by expenses flowing out. Anything left over eventually winds up in the “taxable income” account.

Sometimes, with taxes, that balance breaks down, and many of those disconnects spell opportunity. Real estate investors, for example, can depreciate the price of their properties over time. (We can help you with “cost segregation” strategies to do it even faster.) In the IRS’s ideal world, you’ll repay those breaks by “recapturing” them as income when you sell. But with tax-free exchanges, stepped-up basis, and other strategies to avoid that reckoning, most of those depreciation deductions never get recaptured at all.

Now it’s Halloween: America’s second-favorite, and second-priciest, holiday. The National Retail Federation reports we dropped $9.1 billion on the spooky season last year, including $2.7 billion on candy. (Fun fact: Halloween candy is cheapest exactly four days before the 31st.) How does all that fit into Luca Pacioli’s neat little boxes? Well, it gets scary the minute the greedy little trick-or-treater on the other side of your door goes running down your sidewalk with their loot!

Here’s the disconnect. The candy company sells sweets to a retailer. That’s a taxable transaction. The retailer sells them to you. That’s another taxable transaction. But then you just give it to the little goblins, pirates, and princesses on your porch. No deduction for you, no income for them, no 1099s for the IRS. (Ugh. Can you imagine the 1099s?) That removes everything from the IRS’s world of debits and credits. Seriously, if the IRS taxed kids on their Halloween candy, they could collect millions of dollars to cover free dental care for everyone.

It’s all very ironic because, as any parent knows, Halloween is an exercise in managing the waste of assets. Your kids come home with bulging bags of candy and dreams of sugar highs lasting until Thanksgiving. But pretty soon the good stuff is gone. No more Kit-Kats or Snickers! They’re left with a couple of “fun-size” Milky Ways, some of those Jolly Ranchers nobody really likes, and a few stale candy corns. At that point, you “charge off the goodwill” by throwing out the dregs while they’re at school and hoping the kids don’t even notice.

Today, your average accountant or tax professional focus their effort on making sure the debits match the credits. But we don’t just stop there. We take the time to look for those tax “disconnects” that can rescue thousands in taxes. There’s nothing scary about it at all. So call us when you’re ready to pay less. You’ll think the savings are pretty sweet!

Trump Tax Plan

The Tax Cuts and Jobs Act was signed into law by President Trump in December 2017, ushering in a new wave of tax rules. The tax code is thousands of pages long, full of obscure rules on topics that don’t apply to most Americans. It’s likely that you don’t need to know expensing costs for replanting citrus plants, net operating losses for life insurance companies, and limits on FDIC premiums that banks with more than $10 billion in assets can deduct. With all the new tax law changes, what you need to understand is how the Trump tax plan affects you, and how you can take advantage of these new rules to keep more of what you make. At Financial Gravity we know that, in the end, it’s what you keep that counts.  

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paying taxes

Taxes and patriotism have been wrapped up together pretty much since the Boston Tea Party. The consensus has long been that while paying taxes is a patriotic act, overpaying on your taxes is not. The United States has one of the highest rates of tax compliance in the developed world, and while a majority of taxpayers in the United States see taxpaying as their civic duty, there is no reason to overpay what is legally, ethically, or morally owed. A basic business fundamental is to maximize money coming in and minimize money going out. The easiest way to increase profit is to ensure that you aren’t spending money unnecessarily. A strategic tax plan from Financial Gravity is the business fundamental you are missing to make sure you aren’t paying more in taxes than what is required.

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strategic tax planning

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.

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