Business Tax Planning
Business Tax Planning
Business tax planning is different from business planning. Business planning involves detailing how a business will be run and achieve its goals. The business’ objectives, strategies, and projected actions in order to make a profit are explored. Details regarding product or service offerings, customer acquisition goals, marketing plans and financial and operational goals are all worked out in the business planning process.
Business tax planning is the process of reviewing various tax options in order to determine when, whether, and how to conduct business and transactions so that taxes are eliminated or considerably reduced. What follows is a list of potential taxes that, depending on your business model and structure, your business will be required to pay as early as on your first day of operation.
The form of your business entity (corporation, partnership, or sole proprietorship) determines how your business and any income derived from your business will be assessed taxes. If your business structure no longer fits your business model or growth plans needs to change after the business has been formed, a change is possible to take advantage of tax benefits.
Buying and Selling Assets
Minimizing or eliminating the capital gains tax increases the bottom line. The tax treatment of a purchase or sale of an asset can be planned to maximize a profit from an acquisition or purchase.
Texas Franchise Tax
The Texas Franchise Tax is a tax assessed on all businesses for the privilege of forming and operating in Texas. The tax is a percentage of the business’ overall gross receipts for its calendar or fiscal year.
Employers are responsible for collecting and paying all employment taxes to the federal government. Understanding your reporting and records requirements for the collection and payment of employment taxes is crucial to avoiding penalties for failure to file employment tax returns or filing them late.
Depending on your industry or business, excise taxes may be assessed to your products or services. Some of the taxes are temporary and others are more permanent in nature. Understanding if your product or service is required to collect and pay excise taxes is important to your pricing and profit models.
Personal Income Taxes
Tax brackets recently changed with the passage of the federal Tax Cut and Jobs Act of 2017. If too many income taxes are being withheld, your income is being taxed too high. On the flip side, some of the itemized deduction categories changed, making the standard deduction attractive to certain taxpayers or unattractive because a former itemized deduction category is no longer available to offset high income taxes.
Individuals who own their own business may be required to pay self-employment taxes. Understanding your tax obligations when you are a solo business is important to your bottom line.
Businesses either rent or own their location, which can be an office, retail store, or warehouse. A business may decide to buy real estate. Commercial real estate, like residential real estate, is subject to local property taxes, that in some jurisdictions also include school taxes.
Collection and Remission of Sales Tax
Some businesses are required by Texas law to collect and remit sales tax assessed on goods and services. There can be state and local sales taxes assessed. Businesses also have reporting obligations involving the collection and remission of sales taxes, which must be filed quarterly and annually.
A Business Lawyer Can Help
There is a common theme to all taxes assessed and collected by the federal and Texas taxing authorities. Businesses are required to collect and pay taxes. Businesses are also required to file tax returns and others such as employment tax returns. Failure to file returns or late-filing returns subjects the business to penalties, including surcharges and interest. Failing to undergo business tax planning process means you and your business will pay more taxes.
Attorney Bruce E. Turner encourages clients to schedule a consultation with a business tax planning lawyer to begin evaluating and recommending strategies to grow their profits. With his business law experience, he can implement tax planning strategies to help your business increase earnings. To make an appointment with Dallas business attorney Bruce E. Tuner, call (800) 486-9553, or contact us online.
Under applicable Treasury Regulations, we are required to inform you that any advice contained in this posting is informational and not intended or written to be used, and cannot be used, to avoid penalties imposed under the Internal Revenue Code.