How The Self-Employed Individuals Can Reduce Tax Liability
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How The Self-Employed Individuals Can Reduce Tax Liability Not many self-employed individuals know that they can reduce tax liability in different ways. They often think that seeking to lower their dues would lead them to illegal activities. If you are one of them, here is good news for you. You can do so through careful study of everything you have at hand and definite planning of the steps you ought to make. Read the following ideas which can get you started on this. Perhaps, having a better understanding of who the self-employed are would be the best starting point. A self-employed individual is someone who owns or co- owns a business. Apart from that, a self-employed individual could be engaging in trade as an independent contractor. Since a self-employed individual does not work for a company, he is responsible for his own tax planning strategy. In connection to that, this person must know clearly the exact amount he needs to pay for a self-employment tax. This is an additional duty on top of the regular tax obligations he must pay. This is why rooting for means to lessen the amount it dictates would be a great benefit. The first procedure he can take is to shift the total income he receives to another person. This can be done legally if he employs any family member as part of the business he handles. How does this work? He can transfer a small portion of his income to the family member employed in his business so the amount of the tax he needs to pay will be smaller. This, of course, is best observed with the help of an accountant so that penalties must be avoided. He must ensure that the amount of income to be transferred to his employed family member is matched with the position or work the latter does for the business; nothing more nothing less. A self-employed individual can also reduce tax liability through the details of a health insurance plan. Obviously, he would not be receiving benefits from an employer and so he will be responsible for insuring his health needs. Health insurance premiums are legal deductibles. However, health insurance deductibles must not cost more than the income his business makes. Taking advantage of a retirement plan can also help a self-employed individual prevent high tax dues. This is quite complicated and so professional help must be consulted. The ideas mentioned above are clear indications that performance of illegal practices is not needed just to lower tax payables. Any self-employed individual aiming to reduce tax liability must also be aware of the things which may be considered evasion. One clear example of this is failure to declare all income he receives as the duties would not be calculated correctly with the figures provided. There are times when one declares all the income he receives but fails to show proper allocation of income. This is a procedure that is illicit too. A consultation with a professional can ensure prevention of these practices and substantial penalties from the authorities. ================================================================ Are You Looking For More Information On UK Tax Planning? Click Here To Find Out More. You Can Also Visit Us For The Best Help In Managing Your Self- Employed Tax Today. Tax Planning Services - Insights On Hiring One Many companies these days take advantage of the convenience offered by tax planning services. This is especially true to those who do not have the time to keep their records detailed and or learn the intricacies of a personal financial software packages or tax preparation programs. Perhaps, you have heard of them but you are hesitant about giving them a try. Why don't you take the time to read a few of their benefits? Here they are. Firstly, they can save you from being unprepared for your due dates. Secondly, they remove the burden of computation and recording off your shoulders. Thirdly, they can help in the expansion of your profits as your liabilities are kept to a minimum. Tax planning services can do the latter by giving pieces of advice on your business structure and tracking varied details which may qualify as deductibles. Are you now ready to hire any of these specialists? Generally, the easiest way to hunt for these service providers is through the internet. You can check online directories or simply launch a relevant search in Google. However, there are important things you must keep in mind before pushing through with the hiring process. They are the following. Take Into Account The Size Of Your Business - Why hire a huge firm for a small company with just four employees? The size of the consulting firm you opt to hire will definitely depend on the size of your company. If you have a small business, go to firms that cater to such sector. It would also be wise for you to be clear with the length of time that you will need its services. Is it just for a short term? Know The Background Of The Firm - Is it famed for great service? Do their professionals have full knowledge of the best tax planning strategies? You might be attracted to hire a firm that promises miraculous outputs. Think again. Your aim must be to look for a team that can do the computations right on your behalf in a legal way. Moreover, know its expertise. For all you know, you have hired one that specializes in personal income taxes when you need a business tax service. Gather References - Ask for the list of people or business for which the consultants of the firm have previously worked. Is the feedback positive? If they have a website, read through the comments of its clients. You may contact a couple of them and ask whether the firm was able to provide for their needs. Do An Interview - Firms that offer tax planning services employ consultants who are well-versed about the industry. Take time to have an interaction with the consultants and see how they treat their clients. Ask about their availability. Are they going to stay with you all throughout the process? Show them your business structure and request for a proposal on how they can help you cut your tax payable and save more income for your company since these are the reasons why you are consulting them. =============================================================== Want To Know More About Income Tax Planning? Get More Information Here. You Can Also Visit This Page To Find Out More. Tax Planning Strategies Small Business Owners Must Know It is a fact that it takes years for most small businesses to earn the profit they need. Apart from the possible cut-throat competition in the respective industries to which they belong, they could be paying for numerous obligations. One of these is taxes. If you are an entrepreneur looking for a relief regarding this matter, the tax planning strategies contained in this article are just right for you to read. Do A Thorough Research - Taxes payment dues imposed by the government for different reasons. Compliance to their payments must be taken seriously as grave penalties maybe charged against you for inappropriate filings or missed deadlines. In connection to this you must be well-versed about the differences between and among sales tax, payroll tax and income tax. Ignorance of how they are properly computed will not be honoured by the government. Hire An Outside Consultant - This procedure includes a number of details which can cause headache to anyone who are not used to understanding them. In fact, misinterpretation of data and miscalculations on your part can cause you to spend more than what you ought to pay. What's worse, your business license could be cancelled if the government suspects you falsifying your records. To avoid any of these, hire a consultant who can walk you through the right path of computations. This one of the best tax planning tips you must observe. Track Possible Deductions - Do you know other deductions which may be taken from your gross income? If not, research. Deductions in the form of automobile, entertainment, home office and travel expenses may be helpful on your part. Know Your Business Classification - You read that right. Some entrepreneurs do not even know under which category their business should belong. If your business is classified correctly, your dues maybe reduced. Why? Tax rates vary from one business to another. Know the liabilities due your business. Be Mindful Of Your Due Dates - Due dates are important for all tax planning strategies. Due dates are fixed. However, there are certain circumstances where extension of the due dates may be requested. Do not get your hopes too high though because extensions are not always approved. Keen about getting delays? Try purchasing real estate and pieces of equipment before the new year comes. It can give you some more time to prepare. As you do that, observe advance collection of payments and sale of assets. Discuss Potential Monthly Payments - Sometimes paying a part of your total dues on a monthly basis helps remove the pressure off your shoulder. This is one of the tax planning strategies that most tax payers fail to give a second look. For your information, there are varied payment plans which you can tap in accordance to your needs and eligibility. On the other hand, these plans come with added interest rates. Study first whether your earnings can afford the monthly interest rates or not. You would not want to have a bigger debt right? After all, reducing your payable is what you need. =============================================================== Looking For The Most Reliable Tax Planning Strategy? Click Here. Make Sure To Do Your Research. You Can Also Visit This Website To Consult With Our Tax Planning Experts Today.
Shared by: Stephen Connor
I love to analyze data and work with numbers. Currently, my passion is to help individuals and families prepare and manage their assets. Read these articles to know more about how to protect your assets today.
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