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Video instructions and help with filling out and completing Form 843 Investing

Instructions and Help about Form 843 Investing

Are you tired of losing a big chunk of profits every year to taxes I bet you are the truth is we all want to pay our fair share of taxes but on the same token however none of us want to pay more than our fair share and we shouldn't have to hello i'm matt mcfarland a managing director keith stone CPA i'm joined here by my partner amanda today hi everyone I'm Amanda hon and I'm also a managing director with Keystone CPA welcome and thank you for joining us on this educational video series entitled 5 creative tax saving strategies for business owners in this segment of our video series we are going to focus on some creative tax strategies specifically designed for successful business owners the topic areas we're going to discuss today are one turning bad debt into cash and this strategy works wonders for businesses who have accounts receivable or who accept payment plans from customers we're also going to be talking about some easy strategies to defer payment of taxes for maybe one year or sometimes forever we're also going to touch on how to use taxes increase sales revenue yeah and also tax free or tax efficient ways that you the business owner can extract profits from your business and lastly we're going to touch on tips to plan for retirement and save taxes through your business all right in economic down times a lot of businesses are not doing well some businesses may be in default or even have filed or well be filing bankruptcy for those of you operating your businesses where either extend credit to your customers or deliver goods or services prior to receiving payments you generally have accounts receivable and an opportunity now exists where you will be able to take a tax deduction for any accounts receivables that you would be able to write off as what we call it bad debt expense with the state of the economy the way it is we're seeing an unusually high number of customers who are unable to pay invoices so for those of you out there with accounts receivables near business make sure to analyze analyze that account frequently to identify which invoices are uncollectible yeah after you determine the uncollectible amount work with your tax advisor to create the documentation needed to capture deduct all those bad debt expenses the deduction of uncollectible accounts will result in either a smaller tax liability on your tax return or sometimes even into tax refund yeah a simple strategy that's often overlooked by business owners is the ability to save taxes by deferring income for example let's say you have a big purchase order that comes in near the end of December well if it makes sense from a transactional perspective perhaps consider delaying receipt of that payment until the beginning of January the following year oftentimes by delaying recognition of that income Freeman just one day allows you as a business owner to essentially defer the tax liability associated with that for an entire year so let me give you an example here from one of our clients to help you understand the potential benefits of this strategy our client owns a consulting business where they are able to control when they invoice their customers so we work with them to delay invoicing thirty thousand dollars of services from december until january first of the following year and the reason we implemented this strategy for this particular client is because we perform multi-year projections for them and determine that they will be in a lower tax bracket in the following year so the benefit to them was that not only were they deferring paying taxes on that thirty thousand dollars of income for an entire year but they also paid six thousand dollars less in total taxes on that same income because their tax rate decreased by twenty percent from the first year to the second here yeah there are a lot of options with this type of strategy but the IRS does have defined specific elements that must be in place for these types of strategies to work so just make sure you're working with your tax advisor and ensure that you structure these transactions appropriately and of course you know as with anything else in tax planning make sure that these strategies make economic sense for you in your business because you wouldn't want to lose a big customer because you delay invoicing them I would have to say though I think your customers will not mind a small delay in paying you they'll probably appreciate it if anything now let's move on to the deductions for businesses we already talked about deferring income as tax saving strategy and now on the flip side it works the exact same way for deductions for example if you plan on buying a new computer for your office early next year well why not purchase a month earlier so you can take the deduction now let's go over some other common deductions that are available for business owners think such as taxes insurance accounting fees legal fees and marketing fees to name a few and here's an additional tip contact your vendors for the expenses that we just described to see if they will accept credit card payments if so you just received the tax benefit of prepaying those expenses without any money out of your pocket and that's a win-win for everyone yeah that's a great strategy so let's take this concept to the next level have you ever thought of using tax benefits to increase your sales well we have a client who is in the business of educational courses and we worked with their sales the department to educate them on how these tax deductions could benefit their prospective clients who purchase courses from them our client used this knowledge to educate their current and prospective.

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