7 Secrets To Increased Profits – Part 3
SECRET TAX TIP #6
Avoid Extra Tax With A Wise Business Purchasing Plan!
Avoid the dreaded Alternative Minimum Tax by postponing purchases of depreciable assets or leasing rather than purchasing depreciable assets in years when you have high income and itemized deductions. The alternative minimum tax is calculated by adding to your alternative minimum tax base any accelerated depreciation taken in a tax year.
Most busy business owners are not paying attention to the tax consequences and real money saving ramifications of their purchases. In many cases, armed with up-to-date sales and revenue figures (especially 6 or 8 months into the year) you can properly plan when the best time would be to purchase that next “big thing” you need to run your business. And again, in most cases, you can wait a couple of months and buy after the first of the year or in other cases, spend the money before December 31st. Hey, on large purchases, it really does make a huge difference on your tax return!
SECRET TAX TIP #7
Defer Taxes Owed By Following The Installment Sales Rules
Use the Installment Sales rules to defer the tax you have to pay when you sell property by structuring your transactions so that you receive payments from the sale in more than one year. For example, if your gain on the sale of property would be $40,000, you would owe tax on only half of that amount if you arranged to receive only half of the cash for the sale this year.
Too often, greed sets in and people want to get paid all up front. But, if a deal is structured properly, getting paid some now and some over the next couple of years tends to dramatically help on the tax side of things. Now of course, you don’t know what is going to happen with your financial picture in the future, but you might as well defer as many tax dollars as possible now and make other adjustments with future money in those coming years. If given a choice, most of us would choose to give Uncle Sam his money later rather than earlier.
Now, those are 7 STRATEGIC ways you can benefit from the existing tax code and increase your profits this year. But obviously there are thousands more tax savings strategies available. Depending on your specific tax situation, you can use them all (if they apply) if you wanted to.
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Tags: savings, Small Business, tax deferral, tax stategies, tax tips
