What Business Owners Should Prepare for in the Current Political Environment
Do Business Owners overpay taxes?
by Brett Sellers, CPA with Garrett Gunderson
We find that 93 percent of business owners are overpaying on their taxes, yet 100 percent say they don’t prefer overpaying them. Plus many are concerned or even afraid about the changes and current tax environment.
So with so much talk now about an impending “financial eclipse.” I’m no prophet, but it doesn’t take divine revelation to know that our current situation is tough for business owners, and it will likely get worse.
President Obama has defined the wealthy individuals with incomes over $200,000 and married couples with incomes over $250,000. Although he campaigned on not raising taxes on middle class, he wants to increase the taxes on taxpayers earning above those amounts. He wants to reinstate the 36 and 39.6 income tax rates on high-income earners. He is also pushing to increase the capital gains tax rate from 15 percent to 20 percent, and a dividend rate raise from 15 percent to at least 36 percent.
So what can you do about it?
Tax rates will likely go up. Nothing we can do about that. What we can do is increase our production to offset the tax increase. The antidote of a 5 percent tax increase is to increase production by 10 percent.
Someone once wisely said, “You’ll never go broke paying taxes.” If you’re not paying taxes, it means you’re not making any money. If you pay more in taxes, it means you’re making more money.
So don’t let your attitude and actions be dictated by doomsayers. Don’t be frozen in fear or frustration. Be proactive and productive. Concern yourself less with technical tax code and more with growing your business.
Having said that, I’ll also stress that the current environment makes tax planning even more important than ever.
If your car insurance rates go up, it becomes important to consider your policies. Likewise, if your tax rates go up, the benefit of tax planning is exponentially higher than it was before.
More diligent planning is a vital strategy for dealing with increased tax rates. If your tax rate goes up by 5 percent but you can find 5 percent more in deductions by better planning, you’d be in about the same place.
Truthfully, there are no real opportunities to be harnessed now. The best you can do is to mitigate damage by hiring a good tax planner.
But, while you’re working on finding more reductions, remember that your best bet is to increase your production.
If this philosophy is congruent and you want to know specific strategies, check out the upcoming Curriculum for Wealth where Garrett will interview Brett and get straight to strategy to put money in your pocket. Don’t be part of the 93 percent overpaying tax, find money without having to work harder, hire more people or lose any more sleep. http://www.freedomfasttrack.com/cfw
Brett Sellers is a licensed CPA at Stewart, Archibald, and Barney, LLP in Las Vegas, Nevada. He has worked with business owners for more than twenty years. Brett feels strongly that a business cannot achieve long-term success without accurate financial data and a constant measuring of the key activities of the business.
See another financial blog by Garret Gunderson.