September 23, 2020
3 Steps to Save on Taxes and Keep More of Your Hard-Earned Money
Working in the tax industry we have seen it all. Customers not filing on time, dog eating your records, penalties & interest – you name it! Some things are controllable, and others are out of our hands.
When it comes to self-employed taxpayers: it’s all about self-employment taxes. Year-after-year customers are hit with 15.3% of self-employment tax on top of their regular income tax. With a few smart steps, you can turn those losses into more money for living and savings. The S-Corp is the golden ticket for small to medium-sized businesses.
These are our three tips to keep more cash for you and your future!
1. File S-election and reduce your self-employment taxes an average of 40%:
An S-Corporation’s revenue is split into two types: salary, and profit. These two are taxed differently. As an S-Corp you pay the payroll taxes only on the salary portion of the revenue, while the rest of the profit is payroll tax-free. This is an easy way to save thousands of dollars of tax money in your pocket every year! Why give that money away?
2. Health Insurance:
Enjoy the benefit of health insurance like any corporate employee. You deserve it! There are tax benefits available to you by running your health insurance premiums through your company. These benefits are not subject to employment taxes, and by running them correctly through your payroll – you get a deduction on your personal tax return.
3. SEP & Solo 401k:
Retirement is another great reason to take a salary. Self-employed retirement programs define their contribution limits based on the amount of W-2 wages taken by S-corp officers. S-Corp owners can put much higher sums into retirement if they take the proper salary. The more you can put into retirement now, the less ordinary income tax you will pay in the year!
That’s life as an S-Corporation. Huge tax savings!
Do you want to learn more about how to save on taxes as an S-corp? Reach out to us, We are here to help!Speak to one of our experts