It's the most wonderful time of the year. Celebrations and parties galore. All good times unless you have taxes on your mind! Apply the following strategies to your business or real estate holdings and then go get yourself another glass of eggnog.
1. Document everything and get your books in order. Proper documentation is a must. Make certain to have a system for organizing receipts so you can substantiate expenses on your tax returns. Utilizing technology will improve efficiency. You might even consider a mileage tracking app. Using various expense recording apps on your smart phone can ensure you don't lose information along the way.
2. Review your entity structure. When running an active business it is a good plan to set up an LLC. It is generally simple and cost effective. Without an entity structure in place, any profit can be subject to self employment taxes. You might end up paying around 50% of your earned income to federal and state governments. Don't do it! Transact all business through your LLC if your state allows this. Also, when staking claim in a partnership entity, don't use your own name, use that of your LLC. This way you can choose to have your personal LLC taxed without affecting your partner's tax position.
Utilizing these ideas just may help you save enough money so you can buy a new property next year.
3. Before the year's end, make wise investments. What products or services can you buy now that will help in the future? What items are key to your growth? Maybe a new computer , truck or software subscription can help. Buying these items before the new year will allow you to write off the cost in 2016.
4. Establish and use retirement accounts. When flipping, developing or selling a home, retirement accounts can become a powerful tax planning tool. Business owners can contribute up to $53K per year. Make sure you are taking the appropriate steps now to minimize your tax liability. Talk with a CPA, lawyer and finance professional to get the best tax strategies to help put more money in your pocket before the year is up.
Call the Kohan & Associates Real Estate Team when your nest egg is ready! www.suncoasthome.com
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