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Dear Tax Talk,
C corporation’s income has tripled in one year and wants to save money rather than give to the government. Need suggestions or referral to a simplified guide (for dummies) to assist.
You get what you pay for. A simplified guide might tell you what to do in a general sense, but it won’t substitute for the advice of a CPA who can look at your complete picture and provide alternative strategies.
There are many things that you can do to lower your income as a C corp. Which one is right for you and your plans can best be decided by consulting with a professional.
One thing I’ve learned is that business owners should stick to what they know. It’s more profitable than trying to learn what I know, rather than paying for it.
Some questions would be: Why is it a C corp when most small businesses elect Subchapter S status? What accounting method do you use? Acceptable methods of accounting are cash or accrual. The cash method offers you more flexibility in lowering your profits. Did you pay adequate salaries? Would it make sense to create a retirement plan? Are there any fringe benefits that you’re entitled to that you’re missing out on? Have you expensed fixed assets under Section 179? Have you written off bad debts and obsolete inventory?
CPAs love checklists. Consult one to find the right answers for your situation.
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To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Taxpayers should seek professional advice based on their particular circumstances.