By making tax planning part of our clients’ overall business, personal, and retirement strategy, we can often help them minimize their tax liabilities. As things change in your business and in your life, we help you focus on your tax planning accordingly. If you would like to receive more information about our tax planning service, contact us today.
What is tax planning?
Tax planning is the key to using available tax strategies to reduce or postpone your tax liability legally. The more money you make, the more critical tax planning becomes. The tax code is complex and complicated — it is 70,000+ pages long and includes statutory code, regulations, and rulings that we accountants have to know. Therefore, planning for you means that we help you take advantage of the tax law provisions (about which we have to stay current), accelerating tax credits and deductions, and pre-planning applicable transactions with taxes in mind, whether it be for your business or your personal tax returns.
Cost Segregation Studies
Cost segregation continues to be one of the largest tax incentives for wealth preservation. A cost segregation study is a federal income tax tool that increases your near-term cash flow, in the form of a deferral, by utilizing shorter recovery periods to accelerate the return on capital from your investment in property. There are few investments that the United States Federal government allows investors to expense dollar for dollar. Real estate is that exception. You can deduct 100% of the purchase price against taxable income., allowing for a 50% return on investment at a 50% federal and state tax bracket.
Cost segregation enables the investor to mitigate tax liabilities and preserve wealth by accelerating these deductions much quicker. Ask O&S how we can help you with this.
Read some compelling Cost Segregation Studies on different property types at Engineered Tax Services.
R&D Tax Credit
The majority of states in the U.S. offer a Research and Development Tax Credit. This is a permanent federal tax incentive that is meant to provide stimulation in the manufacturing industry through technical design and innovation. Though the R&D Tax Credit has been available since 1981, it was only through tax regulations that were finalized in December of 2003 that significantly grew the different types of activities that qualified for the credit.
A wide variety of companies across a number of different industries will now qualify. You do not need to develop a process or product that is new to an industry. These types of dollar-for-dollar tax credits are for tool and die / job shops, manufacturers, software developers, plastic mold injection, engineering & architectural firms, food processors, construction contractors, agribusiness, chemical companies, and textile/apparel companies, among a number of others.
Fewer than one-third of companies that are eligible realize they now qualify for an R&D tax credit. Even companies that have utilized the credit are often not claiming all that they are fully entitled to. Be sure to take a closer look at the R&D Credits Overview that has been developed by Engineered Tax Services.
Common tax saving strategies
- Timing of income, expenses, and asset acquisitions for both your company and family’s tax effects
- Retirement plans that you set up for your employees if you own your business, and for which you make maximum allowable contributions to these plans
- Section 529 plans (a tax-advantaged savings plan designed to encourage saving for future college costs)
- Estate planning for end-of-life decisions so that your heirs are protected from unnecessary taxes
Businesses have tax planning considerations each year including 1099 Reporting, highlighted in our recent blog: