Are You Throwing Away Money on Taxes? Here’s How to Stop

by | Jun 25, 2024

Are You Throwing Away Money on Taxes? Here’s How to Stop

by | Jun 25, 2024

Saving money on taxes doesn’t have to be as complicated as many people think. While the implementation and audit-proofing processes require effort, identifying tax savings opportunities is straightforward. Here are key strategies to help you reduce your tax burden and keep more of your hard-earned money.

Personal Experience and Transformation

Six years ago, my business and perspective on tax savings changed dramatically. My dad came to me, desperate because he was facing a significant tax bill. Determined to help, I immersed myself in learning advanced tax-saving techniques. By applying these strategies, I saved my dad over $45,000 in the first year. This experience transformed my approach to helping clients and demonstrated the significant impact of proactive tax planning.

Five Areas to Find Tax Savings

  1. Choosing the Right Business Structure

Not every business should be an S Corporation. Your taxable structure should align with your unique needs and financial situation. There are valid reasons to choose different structures, each offering specific tax benefits and implications. Analyzing the full picture with a tax professional can help determine the best structure for your business.

  1. Reviewing Retirement Options

Aim to save at least an extra $1 million for retirement by exploring various retirement plans. Options include standard IRAs, 401(k)s, Roth IRAs, solo 401(k)s, and cash balance plans. Tailoring your retirement strategy to your goals ensures you maximize tax-advantaged savings.

  1. Utilizing Niche-Specific Strategies

Certain industries have unique tax-saving opportunities. For example, real estate investors can benefit from cost segregation and 1031 exchanges. Restaurants might qualify for payroll tax credits. Understanding and leveraging these niche-specific strategies can significantly reduce your tax burden.

  1. Optimizing Wages

As a business owner, paying yourself the right amount is crucial. For S Corporations, this means ensuring your wage is reasonable and justified by your role. A reasonable compensation report can provide the necessary documentation to satisfy IRS requirements and potentially lower your overall tax liability. Optimizing your wages also plays a role in maximizing deductions like the Qualified Business Income (QBI) deduction.

  1. Working with a Tax Advisor

Partnering with a tax advisor, rather than just a tax preparer, is essential. A tax advisor will strategize to minimize your taxes, while a preparer focuses on filing returns. By working with a proactive advisor, you can implement tax-saving strategies throughout the year, ensuring you keep as much money as possible in your pocket.

Take Action Now

Taxes are often the largest expense for business owners, and addressing them proactively can lead to substantial savings. If you’re not already working with a tax advisor to optimize your tax strategy, now is the time to start. Schedule a free discovery call to explore how you can reduce your taxes and improve your financial health.

By understanding and implementing these strategies, you can stop throwing away money on taxes and instead, use those savings to grow your business and secure your financial future. If you need personalized assistance, book a call with our team to discuss how much you’re overpaying in taxes. Let’s work together to ensure you’re making the most of every tax-saving opportunity.

More from the blog: “5 Common Tax Planning Mistakes”

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