In last month’s issue, you found a checklist with 14 tax planning ideas for the self-employed.
The ideas expressed were simply one-liners.
In the table below, you find related articles with the nuts and bolts of implementing those tax planning strategies:
|Eliminate the word “friend” from your vocabulary. From now on, these people are sources of business, so start talking business and asking for referrals over meals and beverages.||Creating More Business Meal Tax Deductions After the TCJA|
|Hire your children. This creates tax deductions for you, and it creates non-taxable or very-low-taxed income for the children. Also, wages paid by parents to children are exempt from payroll taxes.||Hire Your Kids to Work in Your LLC or Sole Proprietorship and Put a Huge Chunk of Their Pay Back in Your Pocket.|
|Learn how to combine business and personal trips so that the personal side of your trip becomes part of your business deduction under the travel rules (for example, traveling by cruise ship to a convention on St. Thomas||Five Rules for Turning Your Vacation – Even a Luxurious One — Into Tax Deductible Business Travel|
|Properly classify business expansion expenses as immediate tax deductions rather than depreciable, amortizable, or (ouch!) non-deductible capital costs.||Tax-Deductible Business Expansion Beats Capitalization|
|Properly identify deductible start-up expenses ($5,000 upfront and the balance amortized) rather than letting them fall by the wayside (a common oversight)||How to Deduct the Costs of Thinking about Starting a New Business|
|Correctly classify business meals that qualify for the 100 percent deduction rather than the 50 percent deduction||Deduct 100 Percent of Your Business Meals under New Rules|
|Know the entertainment facility rules so your vacation home can become a tax deduction||Tax Deductions for Entertainment Facility; Part 4, Vacation Home|
|Identify the vehicle deduction method that gives you the best deductions (choosing between the IRS mileage method and the actual expense method)||Are You Cheating Yourself by Using IRS Mileage Rates?|
|Correctly identify your maximum business miles, so you deduct the largest possible percentage of your vehicles.||Know These Four Magic Business Mileage Rules|
|Qualify your office in your home as an administrative office.||When the Second Office in the Home Is a Principal Place of Business|
|Use allocation methods that make your home-office deductions larger.||Tax Saving Tip: Use Net Square Footage to Increase Home-Office Deductions|
|If you are married to no employees, hire your spouse and install a Section 105 medical plan to move your medical deductions to Schedule C for maximum benefits.||Blueprint for Employee-Spouse 105-HRA (Health Reimbursement Arrangement)|
|Operate as a one-person S corporation to save self-employment taxes.||How S Corporation Owners Can Cut Taxes by Keeping a Lid on Their Salaries|
|If you are single with no employees, operate as a C corporation and install a Section 105 medical plan so you can deduct all your medical expenses.||Blueprint for Employee-Spouse 105-HRA (Health Reimbursement Arrangement)|
As a business owner, you are in the tax reduction driver’s seat. This is true regardless of how you operate your business (proprietorship, partnership, S Corporation, or C Corporation).
The tax planning strategies in the chart above apply to you if you operate your business as a proprietorship. Of course, there are dozens and dozens of more strategies in addition to those you can find in the chart, but the purpose here is to give you some select strategies without overwhelming you.
You should return to this char periodically because it’s easy to forget strategies that are possible but that you have not yet implemented. By returning to the chart, you will keep the strategies in your sights.