A recent article on Forbes addresses the apparent ways in which large companies are able to avoid taxes.
Large companies seek “tax inversions” where they are able to have foreign mergers to avoid U.S. corporate taxes. In addition, the IRS has been targeting non-profit organizations instead of large companies for tax issues, especially if those organizations have a particular political leaning.
“It doesn’t seem fair” for small business owners, as the Forbes contributor, Steven Parrish, wrote. Small businesses aren’t privileged to the same opportunities as large companies and they may be susceptible to the IRS.
But Parrish gave some tips for small businesses to take advantage of the tax breaks available to them.
Tax Structure
Parrish recommended that small businesses evaluate their tax structure to make sure that small businesses aren’t filed as a C Corporation and are paying doubled taxes. It might be cheaper to be filed as an LLC.
According to the IRS data from 2012, 1.9 million companies filed as a C Corporation, 3.6 million filed as an LLC, and 4.6 million filed as S Corporations.
Parrish also wrote that companies need to check if they structured their business to be active and not passive in order to avoid a Net Investment Income Tax.
Tax Breaks through Government
There are numerous little breaks that small businesses can use that are offered through the government.
A few examples are the Small Business Health Care Credit and Home Office deduction, as well as hiring spouses or children for work. These tactics save the amount that is available to be taxed.
Exit Plan
There are also numerous exit plans that can result in being entirely deductible.
Parrish uses the example that if a company sells their business to an ESOP, taxes can be deferred.
Small Business Representation
If you own a small business and would like to learn more about your tax options, contact JacksonWhite small business attorney
Call JacksonWhite’s Small Business Law Team at (480) 464-1111 to discuss your case today.