The Tax Advantages To Incorporating Your Business
Incorporating your business comes with many advantages that you can benefit from as soon as you establish a convenient tax structure following the recommendations of an expert.
These advantages can involve different aspects of your business, such as retirement plans, tax-free profits you can invest in your business growth, and a full deduction on losses and medical insurance for families.
Besides that, incorporating your business will allow you to save thousands of dollars yearly, since the tax in corporations is only imposed on the salaries, rather than the salaries and the profits combined in sole proprietorships and partnerships.
As for small businesses, a stockholder’s salary can be considered partially a dividend and become subject to double taxation if it is unreasonable compared to their actual job. Otherwise, this can be easily avoided by withdrawing their profits as salaries.Other than that, leasing your assets to your corporation can be an effective strategy to decrease your tax liability through a rental income. This enables the owner to reduce costs such as maintenance and repair. However, leasing your assets to benefit from tax deductions requires getting a formal lease agreement that charges a reasonable rental fee, just like you would for a third party instead of your corporation.