Most business owners have one goal when it comes to taxes: Pay as little as possible this year. However, that isn’t how you save the most – or achieve the most – in the long run.
In fact, at Vance Wealth, we believe paying taxes is the goal. Why? It means you’re successfully growing and earning more over time.
“It’s safe to assume that, as a business owner, you want to grow your business in the future, so we can also assume you’ll be more profitable in the future. That means, right now, you’re earning less and qualifying for a lower tax bracket than you will be in the future,” explained John Vance, President, and Visionary of Vance Wealth. “Yet one of the things we see too often, especially with new business owners, is tax strategies and purchasing decisions that prioritize tax savings now. As a result, they’re taking the biggest deductions when the tax rate is lowest.”
It seems most business owners make their tax and purchasing decisions based on how much they want to save now – even when it’s not the most prudent choice in the long run.
However, at Vance Wealth, our goal is to minimize our clients’ lifetime tax liability. We do that by creating a comprehensive tax plan that focuses on three key areas: business planning, payroll optimization, and retirement strategies.
“In our experience, these three areas can optimize your business and your tax plan with remarkable results,” John explained. “That’s why they form the basis of our small-business tax philosophy.”
If you’re ready to shift from short-term savings to long-term wealth, you can implement a lifetime tax strategy with these three simple principles:
- Always pay yourself market-based wages. Many businesses don’t pay themselves enough or at all.
- Focus on being profitable. It doesn’t always make sense to spend money in order to avoid taxes. Think long-term.
- Be careful about accelerating deductions using Section 179. Today’s lower tax brackets are set to revert back to the higher 2017 tax brackets in 2026, unless they’re replaced with new legislation. Sometimes, paying taxes now, while in a lower bracket, makes more sense for your financial future.
Does your business need a tax plan that builds a lifetime of wealth – instead of just paying next year’s tax return? Book a complimentary consultation with one of our Wealth Advisors: https://vancewealth.com/book-an-appointment/
Disclosures: The information provided is for educational and informational purposes only and does not constitute advice. Vance Wealth does not provide tax or legal advice. You should contact your tax advisor and/or attorney before making any decisions with tax or legal implications.