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Small business tax planning in New York

With so much to think about, small business owners may not make tax planning a priority. However, there are several good reasons to do so. First, it may be possible to reduce either business or personal income tax rates, which could reduce how much an individual pays out each year. Planning ahead may also make a business owner aware of tax credits and know ahead of time if the AMT will impact his or her tax return.

Putting money into a retirement account may lower taxes while also helping small business owners save enough for retirement. One such option available for the self-employed is the Simplified Employee Pension Retirement Arrangement otherwise known as a SEP-IRA. It allows contributions equal to 25 percent of business income up to $265,000 or a maximum of $53,000.

Other options for retirement savings include a personal Roth IRA in which individuals contribute after-tax dollars that then compound tax-free. This means that an individual does not pay taxes on any capital gains if they are removed after age 59 1/2. The maximum contribution is $5,500 per year. For those who make too much for a Roth IRA, a traditional IRA may be appropriate, or it may be possible to convert a traditional IRA to a Roth IRA.

Business owners who wish to lower their tax burden may wish to talk to an attorney about their options. An attorney may be able to suggest local CPAs or other professionals who may be able to help with tax planning and other issues. In the event a company is audited, a tax attorney may be helpful in resolving the issues in a favorable manner.

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