Succeed As Your Own Boss

ENDING SMALL BUSINESS FAILURE

  • Home
  • About
  • Book Melinda
  • Consulting
  • SBL Store
  • SmallBizLady University
  • Free Tools
  • Podcast
  • #Smallbizchat
    • Be a #SmallBizChat Guest
  • Blog
  • Contact
    • We’re Hiring!
You are here: Home / Cash Flow & Finance / How to Leverage Tax Planning in Your Small Business

How to Leverage Tax Planning in Your Small Business

November 7, 2019 By Melinda Emerson Leave a Comment

Feel free to share...Share on facebook
Facebook
Share on twitter
Twitter
Share on google
Google
Share on linkedin
Linkedin
Share on pinterest
Pinterest
Share on reddit
Reddit
Share on email
Email
Share on print
Print

How to Leverage Tax Planning in Your Small Business - Social ImageDavita Pray CPA @davitapraycpa provides tax preparation, business consulting, and Quickbooks services either in your facility or at my location. She provides tax preparation with the personalization that software packages can’t. She stays up-to-date with the changing tax laws, as well as any requirements for business owners. Her business is based in West Chester, Pennsylvania. As a CPA, she adheres to ethical standards and codes of professional conduct established by governmental bodies and peer organizations. For more information: www.davitapraycpa.com

SmallBizLady: What is Tax Planning?

Davita Pray CPA Tax planning is analyzing financial transactions from a tax perspective in an effort to reduce or eliminate future tax liability. 

SmallBizLady: What are the benefits of tax planning?

Davita Pray CPA Tax planning can save business owners 10s of $1000s of dollars per year over the life of the business. Tax planning is the practice of “Tax Avoidance”, which is legally using the existing tax laws and regulations to reduce the amount of tax owed. Tax evasion, however, is deliberately hiding income or other important information in order to “evade” paying taxes, which is illegal. 

SmallBizLady: How does tax planning work? 

Davita Pray CPA The client and the accountant meet to discuss current year business operations and future plans. We do a projection of the current year tax liabilities and brainstorm ways the business owner can structure future transactions in the most tax efficient manner, using the current tax laws and regulations.

SmallBizLady: Why is tax planning important for business owners? 

Davita Pray CPA In my experience, Business owners often pay unnecessary interest and penalties on their tax returns due to not paying enough quarterly estimated payments. This is due mostly to the business owner not paying attention to their business financials until tax time. Proactive tax planning can prevent paying these unnecessary penalties Furthermore, there are many provisions in the tax code that business owners can take advantage of that they may not be aware of.

SmallBizLady: When should business owners start thinking of tax planning?

Davita Pray CPA By the end of the first quarter of each year and whenever there is (or will be) a significant change in your business; such as when you are planning to make a significant investment in your business, when you see a substantial increase in gross revenue, and if you plan on starting a new line of business.

SmallBizLady: How often should owners meet with their accountant to discuss tax planning?

Davita Pray CPA Typically, twice a year. The first meeting is by the middle of the year to come up with a game plan and to assess the current year’s financial progress. Then one more time before the end of the year to ensure the previous projections are still accurate and make any necessary adjustments.

SmallBizLady: Is tax planning about just finding the most deductions in the current year? 

Davita Pray CPA No. Tax planning for business owners will typically be more comprehensive. A good tax plan will take into account both the short term and long-term goals of the business. It will often require that the business owner have an open mind. In some cases, a business owner may have to forgo getting the biggest deductions in the current year in order to save more taxes down the road. 

SmallBizLady: What common pitfalls do you see business owners make when it comes to tax planning?

Davita Pray CPA Not monitoring their finances throughout the year. This is often due to books and records not being updated throughout the year. It’s not until they see a large balance due at tax time that they consider other deductions that could be taken. I tell clients all the time that once tax time arrives, it’s already too late.

SmallBizLady: What are some common tax planning considerations for business owners?

Davita Pray CPA Entity classification is a big one. Many business owners form an LLC and think they are done. Many business owners don’t realize that an LLC is a disregarded entity for Federal Tax purposes. Depending on their type of business, they may want to consider a C or S corp. Each entity type has its pros and cons from a tax perspective and each factor should be considered prior to choose an entity type. Another consideration is the timing of transactions. For instance, if a client is planning to pay you a large invoice at the end of the year, would it make more sense to have them pay the invoice in the following year in order to avoid higher taxes? 

SmallBizLady: How can business owners benefit from the Tax Cuts and Jobs Act (TCJA)? 

Davita Pray CPA There are many provisions in the TCJA that business owners can take advantage of. There were also many deductions that were taken away. For instance, the Federal Tax rate for C Corporations is now a flat 21%. For all other small businesses that are not C Corporations, there’s a new deduction called the Qualified Business Income deduction (QBID) that can be as high as 20% of a business owner’s net profit.

SmallBizLady: How did Amazon avoid paying Federal Income taxes last year? 

Davita Pray CPA Amazon was able to take advantage of a common tax strategy called the Capital Loss Carryover. When a company experiences a loss that is beyond the deductible limit in the current tax year, the remainder of that loss can be carried forward to a number of future years to be offset against future income. 

If you found this interview helpful, join us on Wednesdays 8-9 pm ET; follow @SmallBizChat on Twitter.

Here’s how to participate in #SmallBizChat: http://bit.ly/1hZeIlz

For more tips on how to start or grow your small business subscribe to Melinda Emerson’s blog http://www.succeedasyourownboss.com.

 

Feel free to share...Share on facebook
Facebook
Share on twitter
Twitter
Share on google
Google
Share on linkedin
Linkedin
Share on pinterest
Pinterest
Share on reddit
Reddit
Share on email
Email
Share on print
Print

Filed Under: Cash Flow & Finance, SmallBizChat Tagged With: business accountant, Federal Income taxes, small business owners, Tax Cuts and Jobs Act, tax liability, tax planning, tax preparation

Fix Your Business Now!

Order SmallBizLady's new book Fix Your Business, 90-Day plan to Get Back Your Life and Reduce Chaos in Your Business. It includes the 12 Ps of Running a Successful Business and readers will finish the book with a new strategic plan to take their business to the next level.

About Melinda Emerson

Melinda F. Emerson, “SmallBizLady” is America’s #1 Small Business Expert. She is an internationally renowned keynote speaker on small business development, social selling, and online marketing strategy. As CEO of Quintessence Group, her Philadelphia-based marketing consulting firm serves Fortune 500 brands that target the small business market. Clients include Amazon, Adobe, Verizon, VISA, Google, FedEx, Chase, American Express, The Hartford, and Pitney Bowes. She also has an online school, www.smallbizladyuniversity.com, that teaches people online marketing and how to start and grow a successful small business and publishes a blog SucceedAsYourOwnBoss.com. Her advice is widely read, reaching more than 3 million entrepreneurs each week online. She hosts The Smallbizchat Podcast and is the bestselling author of Become Your Own Boss in 12 Months, Revised and Expanded, and Fix Your Business, a 90 Day Plan to Get Back Your Life and Reduce Chaos in Your Business.

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Let’s Connect

  • facebook
  • instagram
  • tiktok
  • pinterest
  • linkedin
  • twitter
  • youtube
  • feedburner

Sign up for the SmallBizLady BUZZ Newsletter and be the first to receive updates and details about upcoming events:

We’re proud to be part of the Mediaplanet Empowering Small Business campaign! The COVID-19 pandemic brought hardship and ruin on the nation’s small businesses, but there’s now reason for hope. Learn about the resources, support, and tools available to help your small business bounce back and grow stronger than ever by picking up a copy of the campaign in USA Today and reading it online here.

Get a FREE Chapter of SmallBizLady’s Book,
"Become Your Own Boss in 12 Months, Revised and Expanded"!

Become Your Own Boss

Most Popular Posts

>Seven Ways to be More Profitable in Your Small Business
> 7 Ways to Attract Customers to Your Small Business
> 6 Tips for Managing Small Business Finances
> How to Run a Successful Multilevel Marketing Business
> 10 Ways to Grow Your Small Business With Instagram
> How to Sell on Facebook
> How to Get Over the Fear of Starting a New Business

Featured Videos

Bloomberg News Interview
How to Support Small Businesses During the Holidays

National Speakers Association
Winter Conference

Fox 29 Philadelphia
'Small Biz Lady' gives best advice for starting a new business in the New Year

Fox Business
Starting a Business

MSNBC
The importance of job mentoring for women

#SmallBizChat Live
National Small Business Week: Q&A

Good Day Philadelphia
Expert Shares Tips on How to Become Your Own Boss

Testimonials

Become Your Own Boss is a must read if you’re thinking of launching a business of your own.
Jean Chatzky, Bestselling Author of Money 911 and Financial Editor of NBC’s Today Show
Great step-by-step advice for anyone looking to start their own business.
Andrew C. Taylor, Chairman, Enterprise Rent-A-Car
Melinda Emerson has written a remarkable book. It is essential reading for anyone seeking to make the transition from working girl to successfully working it, as an entrepreneur.
Cynthia McClain-Hill, Past President, National Association of Women Business Owners
The perfect companion for those planning to go out on their own. Melinda delivers firsthand practical advice on how to be the successful entrepreneur. Read it if you want to get it right the first time.
Kenneth L. Shropshire, Professor at the Wharton School of Business, University of Pennsylvania
If you are looking for a versatile speaker who can talk about how to grow small businesses or get started with social media, look no further.
Heather Van Sickle Executive Director, National Association for Community College Entrepreneurship (NACCE)
Her wit and depth of subject knowledge were entertaining and empowering. Melinda is definitely on our short list of seasoned entrepreneurs and business leaders we look to invite back in the near future.
Tennille M. Robinson Senior content & Event producer for Inc. magazine
Melinda Emerson, “SmallBizLady,” is an engaging and witty speaker and a great addition to any conference. Her terrific presentation and compelling delivery give people the information they need and want to become their own bosses and grow success… Read more
Laurie Dalton White Conference Director, Pennsylvania Conference for Women
Melinda Emerson has been a fantastic small business and social media resource for the Pitney Bowes team. Not only is she personable and easy to work with, but she also has an innate understanding of the small business audience. My marketing programs … Read more
Justin Amendola, Former VP, Global SMB Digital Strategy, Pitney Bowes

Latest #SmallBizChat

The SmallBizChat Podcast: Hit It and Quit It with Mitch Axelrod, Dr. Dan Young, and Rich Trotter

In this episode, Melinda Emerson introduces an engaging discussion with guests Rich Trotter, Mitch Axelrod, and Dr. Dan Young. The conversation kicks off with each guest sharing their favorite business podcast and app, revealing unique tools that aid their entrepreneurial journey. They then delve into timeless marketing strategies, discussing classic tips that still hold relevance […]

Fix Your Business Q&A Video

Recent Posts

  • The SmallBizChat Podcast: Hit It and Quit It with Mitch Axelrod, Dr. Dan Young, and Rich Trotter
  • 50 Best Free Apps for Small Business Owners
  • The SmallBizChat Podcast: How to Reinvent a Legacy Business with Rich Trotter
  • May 2025 #SmallBizChat: How to Position Your Brand with Multicultural Markets
  • How to Tighten Your Sales Infrastructure (Before Your Bank Account Screams for Help)

#SmallBizChat

  • SmallBizChat Archive
  • @SmallBizLady

Business Advice

  • How to Start

SmallBizLady Store

Products

Free Chapter

Get In Touch

  • FAQ
  • Be a #SmallBizChat Guest
  • Contact Us
Copyright © 2025
Quintessence Entertainment, Inc
PO Box 280
Drexel Hill, PA 19026
(610) 352-0680
Privacy Policy · Refund Policy

Let’s Connect

  • facebook
  • instagram
  • tiktok
  • pinterest
  • linkedin
  • twitter
  • youtube
  • feedburner