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Process of S Corporation Tax Planning

  • Tax Planning Process

    Tax planning process is a continuous yearly activity that must be done to help lower the corporation’s tax liability. It has no clear defined procedures but it entails application of such methods:

  • Corporations Tax Liability

    Selection of an appropriate mode of accounting that shall help lower the corporations tax liability as long as it aligns to the IRS.

  • Inventory Valuation

    Use of efficient and effective inventory valuation procedures such LIFO or FIFO in their appropriate advantage periods.

  • Operation Equipments

    Purchasing of adequate and up to date operation equipments, plant and assets regardless of the costs incurred because this shall be deducted to the final taxable income for the corporation.

  • Qualified Operational Staff

    Involving high end or the most qualified operational staff, consultancy officers, legal officers, accountancy officers for the benefit of the business. All this shall however be deducted at the end of the year when filling returns.

  • Business Operations Modes

    Undertaking various business operations modes whether by sales or cash. Bad debts on credit sales shall at the end be deductible on the corporations’ taxable income.

  • Acquisition of Financing

    Acquisition of financing through loans or even credit purchases. This is so because all interests accrued on loans received from any financial institutions is deductible on the corporations taxable income.

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Benefits of S-corps Tax Planning

Medical Compensation

The company may have the advantage of using medical compensation plans. i.e. all the employees medical expenses can be met by the company thereby making this a deductible expense to the company as well as being tax free to the employee’s.

Tax Benefits

S-corporations have the ability to accrue earnings for future growth and expansion at a lower cost compared to other entities.

Public Company

The company can easily be made to be a public company. This is because the corporation shall be able to attract funding hence being able to be traded on the national stocks

Venture Capitalist

S-corps companies requiring quite an amount of capital may approach venture capitalist for their capital.

Factors of Consideration Under Tax Planning for S Corporations

  • Acquisition of equipments costs. This however may be limited to certain equipments as outlined in the IRS. More over it is encouraged that this be spread over a number of years.
  • Bad debts written off. Any expenditures that may be incurred as a result of failure of payment on credit sales qualify for tax deduction under the federal tax laws.
  • Costs incurred on advertising of the business are also deductible on the corporations annual incomes.
  • Expenses incurred on professional services for instance consultancy, legal services, compliance with tax codes, accountancy services etc.
  • Operational expenses for the business. This may include rent for the premises, office stationeries etc.
  • Interest expenses incurred on loans or credit services required for start and operation of the business.
  • Insurance expenses. This may come under various forms i.e. premiums paid for burglary/theft, fire insurance, debt insurance, laborer’s compensation insurance, error/omission insurance etc. All this qualify for tax deduction.
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Are You Looking for S-Corporation Tax Planning?

Just get in touch for free consultation now

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