5 Tax Strategy Tips Every S Corp Owner Should Implement Today
Implementing an efficient process for tax planning and tax strategy can help reduce the tax bill. To be effective you should meet with your tax planner on a monthly or quarterly basis to be sure no deductions are missed or check to see if a future business decision has a tax ramification. Consider implementing the following tax tips in your business today.
- Never commingle your business and personal accounts. Business cash should be kept separate from personal cash. Learn about the concept of “Piercing the Vail” from your legal adviser.
- Pay Reasonable Compensation to owners working full-time in the business. IRS guidelines can help determine what is considered Reasonable Compensation. Be sure to keep all records and business purposes for determining your compensation.
- Review Your Stock Basis at the beginning of each new tax year. This is the responsibility of the taxpayer. Seek help from your tax advisor if you are unsure how this works.
- Keep your own records for tracking your stock basis. Basis will help with important tax decisions including tax-free distributions or gains or losses from the sale of the stock.
- Shareholder loans should be documented. Document should outline repayment terms including the interest rate at the applicable Federal Rate.
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