The only constant within the business tax environment is that it is ever-changing. Within that dynamic, figuring out the credits and benefits a company or estate qualifies for might be challenging and rewarding, but it will also most likely require outside, professional help. The following are four business tax strategies every estate and business owner should employ in the latter half of 2017 and beyond.
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1. Research and Development Tax Credits
R&D spends are no longer just for big tech or scientific manufacturers or companies. Small businesses can benefit from a tax credit of up to 20% that made its debut in 1981 to encourage companies to invest more annually in R&D — helping businesses create more jobs and expand employee skill sets. Expenses that qualify include renting or leasing of computers, wages, supplies and even third-party payments. A consultant can help business owners identify these opportunities through tax return analysis, document examination and preparation for the IRS and credit studies.
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2. Cost Segregation Studies
A cost segregation study is the procedure of determining and separating personal property assets that are affiliated with real property assets. The primary benefit of a CSS is that it reduces the time it takes for assets to depreciate, lessening the income tax burden for the business holder. Aside from minimizing tax dollars, embarking on a CSS offers several advantages, including tax deferrals, the creation of a properly documented audit trail, the ability to retroactively claim tax deductions, uncovering further opportunities to cut real estate tax obligations and providing assistance with estate succession planning.
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3. Transaction Consulting
One of the more stressful parts of any acquisition is determining how the transaction will affect earnings and assets. Seeking professional advice on this front is called transaction consulting.
When a business owner meets with a good transaction consultant, he or she begins the process of preparing and creating a comprehensive analysis of the company finances prior to a large transaction or transfer of assets. The more information business owners have on how such a transaction might affect their revenue and taxation, the better. A transaction advisory expert or professional can help frame strategies for business disposition and acquisition, perform due diligence on buy-side and sell-side earnings and tax structuring, generate location and market reports, and identify and analyze the resulting risks.
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4. Trusts and Estates
Many families aim to keep (and grow) their assets beyond the current generation. Long-term trust and estate taxation is tricky to navigate with tax laws and regulations perennially subject to revisions and updates. This means the creation of private foundations, sustainable and accurate business valuations, and the establishment of wealth transfer vehicles require tailored, exhaustive planning. A good tax and estate planning adviser is the key to such organization, thus ensuring long-term financial stability.
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