Taxes stink, and none of us like paying them, but it’s a way of life. Like that old saying states, “Death, and taxes are always guaranteed in life.” If you want to find some great ways to burden your taxes, here are some steps that you can take.
1. For the small business owner, set up an SEP, which stands for Simplified Employee Pension. The money placed here is for retirement and reduces the income taxes owed by the firm. Note that if a small business owner sets this up for themselves, it must be available to all other full time employees of the firm. However, you can hire your spouse to gain these benefits.
2. Pay performance bonuses to employees, including to the owner and key staff. Income paid to employees reduces the taxable income of the corporation. Social Security and FICA taxes are owed by the employer on these bonuses, but this is less of a tax burden than income tax by the corporation on this amount.
3. Buy health insurance for employees. Health insurance can be expensive for a company, but it is also a huge tax write off in addition to being an excellent employment incentive. Consider high deductible catastrophic health plans coupled to Health Savings Accounts. The company owner can join into the company’s plan instead of buying on the open market, which is much cheaper to buy as a group than as an individual.
4. Consider buying other insurance for employees. Company purchased life insurance and accident and disability insurance are affordable perks to staff. High accidental disability coverage may also reduce the worker’s compensation costs owed by the company, depending on the state the company is located in.
5. Make a donation. While corporate donations are not deducted at 100% of the amount donated, they can be leveraged into excellent publicity. Donated money can be used to improve corporate image or to make the community aware of the company’s existence. Goods can be donated if money is tight. However, employees donating time to charitable causes, even if paid for the time they are volunteering by the company, cannot be deducting from the taxable income. It must be physical goods, such as a bakery donating food, or money.