Small Business Tax Advice

Small Business Tax Advice. Free online tax advice to help you save on taxes.

Small Business Free Tax Advice

Own Small Business Stocks

Here’s one way you can avoid taxes on up to 50 percent of stock capital gains. In order to encourage the formation of small businesses, the current tax law allows stockholders of qualified small business stocks to exclude 50 percent of any gain on the sale or exchange of the stock.

Free Online Tax Advice

As suggested in Hallman and Rosenbloom’s excellent book, here are some small business tax-planning caveats you should be aware of:

Avoid sham transactions – do not undertake transactions that have no real economic substance other than to simply save taxes.

Do not let tax factors outweigh other important objectives – as is the case for most financial decisions, there are multiple considerations involved. Tax savings should only be one of them, do not consider it to the exclusion of everything else.

Consider what must be given up for the tax savings – consider the alternative to tax savings: would that alternative give you greater flexibility, control or something more desirable than monetary savings? Ask yourself the question, ‘What will I have to give up to secure the expected tax saving?’

Keep planning flexible – do note that tax laws, tax rates and financial circumstances do change over time. Your tax-saving plan should be sufficiently flexible to allow for possible changes in circumstance.

Shift the tax burden to someone else

Yet another important piece of small business tax advice: this strategy works especially well within the family. You can shift income income or capital gains from those in higher tax brackets to those in lower tax brackets. How do you go about shifting income to others? Here are the most common ways:

Outright gifts – equities, mutual fund shares, and a wide variety of financial instruments can simply be transferred from parent to child or grandparent to child; future income from the asset will then be taxable to the donee.

Gifts held in trust – another method would be to give assets through an irrevocable lifetime trust. So long as it is not a grantor trust, trust income will be taxed to the beneficiaries if distributed to them, or to the trust itself if held within the trust.

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