“Let me tell you how it will be.
There’s one for you, nineteen for me.
‘Cause I’m The Taxman.
Yeah, I’m The Taxman.”
— “Taxman,” The Beatles
OK, while no one wants to confront a taxman like The Beatles’ “Taxman,” it is clear that with business comes profits, and with profits comes taxes. But it’s complicated figuring out the best way to retain earnings to not only maintain business wealth, but also handle essentials such as employee payroll, funding retirement programs and offering affordable health insurance.
To give you an initial review of the consequences of various financial decisions, read Wealth Creation for Small Business Owners by James Cheeks. An adjunct graduate business professor at Pace University, Cheeks has crafted an assured guide based on his years offering legal and tax advice for small businesses. Wealth Creation is a splendid a la carte guide for figuring out what financial moves can lead to increased wealth. I received a review copy of this book from the publisher, and felt the tips would be good ones to share with small businesses, family-run firms and solopreneurs.
Chart your way to retaining capital
The book offers 75 tax advantage strategies in all, each truly a good aid and based on rules in effect as of late 2009. The book has a unique organization system for these strategies called the Wealth Opportunities Audit (WOA). The Wealth Opportunities Audit is a chart that matches each offered strategy with situations that the reader may be in or considering. Need help establishing health care for employees? Try Health. Don’t know what a SIMPLE (Savings Incentive Match Plan for Employees) is? Go to Strategy 6. Additional topics include family, retirement, expansion, equipment, succession planning and business premises.
This arrangement allows readers unfamiliar with tax concerns to quickly find actions that can be refined, while also allowing those who are more seasoned the ability to cherry-pick subjects as needed. Sweet.
Who will benefit from the strategies offered?
- Family-owned firms looking to transfer a business or wealth within the family
- Business looking to add heath care and insurance benefits
- Startups operating from home
- Owners who are considering retirement plans
- Entrepreneurs considering equipment purchases or arrangement of specific assets
While the book does focus on retaining wealth, the strategies are not presented in a cheesy make-money-now style. For example, Cheeks addresses the suggestion to add a family member:
“Lots of people tell the entrepreneur to put his kid on the payroll. It’s a way, they say, to shift tax on what the kid is paid from parent to kid…But let’s get real about what it’s worth. The tax saved is trivial in most cases, because the kid’s work is trivial…Take on family members who are capable to do work you’d otherwise pay someone else for.”
Cheeks reasonably anticipates the changes ahead, though without a lot of detail. When discussing health care, for example, Cheeks does note that health care regulations change is anticipated for 2013 (he provides a link for updates). Finally, Cheeks is good at recommending methods business owners can use to compensate themselves in a business, and states in plain English the thought behind each strategy.
While it is a short guide, Wealth Creation for Small Business Owners offers enough help and flexibility for business owners in many different situations who are seeking tax breaks. The standard footnotes apply here: Seeking advice for specific tax concerns is always wise. But this book will aid those discussions that will lead to serious wealth growth.
Someone once remarked, “Next to being shot at and missed, nothing is quite so satisfying as an income tax refund.” Even better than a refund is not paying more tax than you should do in the first place. The way I see it, paying more tax than you need to is pure folly and financial nonchalance.
The only way to do this is do not neglect to consult your tax advisors… and I would have to agree chart your capital to know the flow of your expenses and earnings, this will help you to maintain in wealth building.
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