You almost certainly know that you can write off the mileage for business use of your car. That advice is still true. A nice bonus is that it is easier than ever to track your business mileage with a variety of smartphone apps available. Mileage, however, isn’t the only automotive write-off that you should be pursuing. If you use your vehicle for anything work-related, there are deductions that you might be missing out on. Lease payments, oil changes, insurance, repairs, and even car washing and polishing could be written off. Don’t fall for tax myths, fuel your savings with automotive write-offs.
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.
Choosing the right business entity involves all sorts of tax considerations. Even though a sole proprietorship is the easiest business type to start, it might not be the best type of business for you. Too many business owners are operating with entities that may have been appropriate when they were established, but aren’t working as effectively now. Let’s go over Sole Proprietorship vs LLC and see which business type is best for you and best for your business.
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!
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.
Like any business owner, you’re always looking for a way to add to your bottom line, to increase the ratio of revenue over expenses. Did you know that there’s a relatively easy way to do exactly that without having to hire new employees or come up with a new business plan? Read more
If you are an entrepreneur or small business owner, having a good accountant is essential for the function and success of your business. You need someone to make sure your books are in order, and you have properly paid your taxes–in other words, good tax preparation. However, if you want help lowering your taxes, increasing your profits, and attaining greater wealth, you’ll need the help of a proactive tax strategy. Read more
As a small business owner, finding legal and ethical ways to increase your tax savings shouldn’t be a full-time job in itself. Unfortunately, most accountants, attorneys, or business consultants aren’t taught to master the myths standing between you and your money. In fact, the financial industry benefits from small business owners not understanding tax myths.
Wait, my accountant can’t help me with tax planning and tax savings?
The CPA exam is focused on General Accepted Accounting Principles and has nothing (absolutely NOTHING) to do with taxes. Your accountant may be a lovely human being, but they aren’t the ones you should be consulting about tax savings.
So if I can’t turn to my CPA to help me find ways to pay less tax, who can I turn to?
Well, you have a couple of options. You could read all 70,000+ pages of the Tax Code. (Though this option will likely be zero fun for 99% of the people on the planet.)
Who is this option for?
People who have too much time on their hands and a passion for onerous, complicated, and bloated text.
No, thanks. I’ll pass. Any other options?
You could download the Tax Myth eBook, a book that our CEO, John Pollock, put together outlining 10 of the most damaging misconceptions about taxes — and then read it. This free eBook will help you prevent further loss (in taxes) or prevent you from losing money in the first place.
Who is this option for?
Do-It-Yourself-ers who want to lower their tax liability…quickly, legally and ethically, and who make under $100,000 gross income.
What if I make more than that, what should I do?
Get in touch with us. At Financial Gravity, we have expert tax planners and tax specialists who not only understand the tax code and the available “green lights” you can use to reduce your taxes but who will help you engage in proactive tax savings and tax planning.
Who is this option for?
Business owners who have a shortage of time, zero desire to learn about the Tax Code and either pay $20,000+ in personal income taxes or make $100,000+ gross income.
If you’re a small business owner, taxes are your single biggest expense and they will get bigger if you don’t have a sound strategy in place to mitigate them.
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