How to lower your taxes

emr

emr

Cheesehead Treehouser
Joined
Nov 5, 2006
Messages
2,193
Location
Neenah, Wisconsin
Our accountant just emailed and informed us that we had too good of a year and we need to spend money or put some in retirement or something to lower our self-employment taxes. What do you all do in this situation? I didn't think this day would come for us, but I guess it did.

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  • #4
How does that work.... Expense vs depreciation? Do you just expense it all that current year and no future depreciation?

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  • #5
And I'm not taking bucket truck purchase....

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Assets will depreciate in an annual percentage. Anything less than machinery or vehicles I depreciate/write off 100 percent in the purchase year. Like saws and whatnot.
 
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  • #7
We still haven't pulled the trigger on a mini. Maybe it's time. I wonder if our accountant would let us depreciate that in one year. We really don't need anything small.

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  • #9
That must be a state by state thing.... I'm thinking retirement might be the way to go, or chemicals for PHC

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  • #11
Oops. My bad, I knew that you were oe of "those" people but I forgot.... You guys have taxes up there huh? ;-)

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My accountant seemed to go with the idea of depreciating a lot the first year to use up some profit, and also said that bigger purchases can be depreciated over years. Check with your accountant.

Retirement is good.

What is your biggest slowdown or most work that you could 'buy' your non-employee based company out of?

Wraptor? Helmet comms? Imagine cold winter work with earmuff that allow you to keep warm, and hear your partner. Brush cart or AT...could have a custom fabbed up for your niche. The AT is best for narrow areas. Americans could probably use a wider model.
 
It is good to get used to socking away some retirement every year you can. To the limit of the tax law if possible. Every year isn't a good one and it is amazing how fast you get old. Who knows where social security will be in 25 years.
 
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  • #18
Good point. However I know exactly where social security will be. I used to have a financial advisor and we were planning for no help from the government what so ever. Then I stopped working with the advisor because I had 4 kids and started a business and basically didn't have any money for him to advise me on. I might be hiring him on again if our accountant can't help us out.

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You can look into a solo 401k if you're self employed. You can contribute a ton and your company can contribute a ridiculous amount on top of that to try and get you down a bracket.
 
emr said:
Good point. However I know exactly where social security will be. I used to have a financial advisor and we were planning for no help from the government what so ever. Then I stopped working with the advisor because I had 4 kids and started a business and basically didn't have any money for him to advise me on. I might be hiring him on again if our accountant can't help us out.

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Click to expand...

Eric, I'm in this situation about pro advice. I'm sure your/ my accountant "can help", and I'm thinking that its money well spent, if only on single visit to confirm what the accountant did, and see if they line up. I'm wondering if the team isn't better?
 
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  • #22
Can you expand on your thumbs down? I assume your Co is set up differently. How so and what advantages do you see?

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Sole prop pays much more tax than other entities. Here's a good book that's pretty easy to read and gives you a working understanding of what different entities can do for you
 
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  • #25
So I'm going back to basics here.... I'm set up as a LLC partnership. From what I recall that is better than sole proprietor. Next step is S-Corp. (I think). All of our advisors told us that wouldn't benefit us either. That was at the time of start up. Maybe we need to look at changing sometime in the future. I really can't remember what the deal was with S-Corp.

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