Sub Chapter “S” & EMPLOYEE SHORT COMINGS

Conducting business under corporate, LLC or limited partnership IRS tax codes offers the Owners and Principals tax deductions not available to individuals. The tax advantages derive from the Owners and Principals ability to deduct expense items before taxation rather than after taxation. Example, as an individual your medical and dental expenses are borne by you after taxable earnings and other income. AS A PRINCIPAL IN A COMPANY ALL THESE EXPENSES MAY BE BORNE BY THE COMPANY AND IRS TAX EXPENSED, with no taxable income to the Principals.

One might think combining the above deductions with the further advantages of a Sub Chapter"S" entity to be a tax euphoria.

However, beware of the pit falls of the Sub "S"corporation and LLC tax filing classification. Sub-"S" has the advantage of eliminating the so called DOUBLE TAXATION for corporations and LLC’s, instead you lose many of the tax benefits and deductions allowed under the current "C" corporation’s IRS tax codes. The IRS tax codes governing Sub "S" require all principals participating in company activities BECOME A COMPANY EMPLOYEE. This means with holdings for SOCIAL SECURITY, and where applicable, with holdings for unemployment, workman’s compensation and any other deductions as may be applicable. Employee salaries must be commensurate with comparable open market positions.

Recognize, as the Sub-"S", one half (1/2) of the SOCIAL SECURITY with holding is from the employee’s personal funds and not an IRS corporate or Individual tax deduction. Further, company expenses for employee medical, dental, vehicle, insurance, retirement, travel, entertainment, etc etc. may be IRS declared as employee taxable income, in whole or in part.

NEVADA REGISTRATIONS strongly recommends all "start up companies" consult a competent tax accountant in establishing generally accepted bookkeeping and accounting procedures.

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BUSINESS TRAVEL CAN BE TOTALLY EXPENSED AS LONG AS YOU KEEP GOOD SUPPORT RECORDS. IF YOU TRAVEL WITHIN THE UNITED STATES, AS LONG AS YOU DO BUSINESS ON THE FIRST AND LAST DAY OF YOUR TRIP, ALL LEGITIMATE EXPENSES CAN INCLUDE AIRFARE, CAR MILAGE IF YOU DRIVE, GAS, TAXI, TRAVEL INSURANCE, LODGING, FOOD & BEVERAGE AND TIPS ALONG WITH MANY OTHER DEDUCTIBLES; KEEP A GOOD AND SEPARATE LOG OF EACH TRIP.

IF YOU DO NOT WANT TO KEEP A LOG OF EXPENSES YOU MAY TAKE A PER DEIM SINGLE DAILY DEDUCTION, PLEASE REFER TO MY TAX TIPS OF OCTOBER 2009.

PLAY THE TAX GAME INTELLEGENTLY.

KEEP A LOG OF ALL BUSINESS CALLS, PHYSICALLY VISIT YOUR DESTINATIONS PICKING UP LITERATURE OR ANY MATERIALS AVAILABLE, IDENTIFY THOSE IN YOUR INTERVIEW AND THE NATURE OF THE CONVERSATIONS, PHOTOS ALSO ARE VERY STRONG EVIDENCE IN CASE OF FUTURE IRS AUDIT.

REMEMBER TODD’S BASIC TAX STRATEGY FOR BUSINES EXPENSES,
REASONABLE AND NECESSARY

TAX STRATEGIES:
Todd's Tax tips business strategies

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MANY WHO BUSINESS TRAVEL OUT OF THEIR AREA ARE ENCUMBERED WITH THE HASTLE OF RECORD KEEPING OF ALL TRAVEL EXPENSES. I.E. FOOD, LODGING, TRANSPORTATION ETC. ETC.

PER IRS PUBLICATION, 1542, AVAILABLE ON THE INTERNET AT, www.irs.gov, YOU CAN PULL-UP THE ENTIRE PUBLICATION, WHICH REFLECTS THE PER DIEM ALLOWABLE FOR MAJOR AREAS.

THE PER DIEM WILL VARY FROM SEASON TO SEASON DEPENDING UPON THE ECONOMICS OF EACH AREA.

SAY, THE DENVER SKI AREA IS FCONSIDERABLY MORE EXPENSIVE SKI SEASON INSTEAD OF THE SUMMER.

FOR INSTANCE THE LAS VEGAS AREA PER DIEM FOR 2008 VARIED FROM $157.00 TO $188.00 PER DAY.

YOU CAN STILL DEDUCT YOUR TRANSPORTATION COSTS TOO AND FROM YOUR AREA TO THE VISITED AREA.

IF YOU USE THE PER DIEM METHOD YOU DO NOT HAVE TO KEEP RECEIPTS BUT YOU MUST SUBSTANTIATE THE BUSINESS NATURE OF THE TRIP.

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Todd’s Tax tips business strategy

SAVE THAT “CLUNKER”

YOU CAN TOTALLY EXPENSE YOU BUSINESS CAR IF YOU HAVE A SECOND CAR, REGARDLESS OF ITS AGE AND CONDITION, AS LONG AS IT IS REGISTERED AND STATE LICENSED.

IF YOU DRIVE, SAY OVER A 1,500 MILES A MONTH, MILEAGE IS USUALLY THE BEST IRS TAX DEDUCTION, IRS ALLOWS FIFTY FIVE ($.55) CENTS PER MILE THIS YEAR. FOR SHORTER MILEAGE, DEPRECIATION AND ALL EXPENSES ARE USUALLY BEST, UNLESS YOUR BUSINESS CAR IS QUITE EXPENSIVE, SAY OVER $50,000.00 NEW. ALWAYS BEST TO CHECK BOTH METHODS TO GET MAXIMUM DEDUCTION.

IRS & STATE INCOME TAX MITIGATION

NEVADA CORPORATIONS, IN ADDITION TO A STRONG LAYER OF ANONYMITY AND INSULATION, THE “CORPORATE VEIL” OFFER STRONG IRS TAX MITIGATION. TAX MITIGATION IS NOT TAX EVASION; RATHER IT IS TAKING ADVANTAGE OF ALL APPLICABLE TAX CODES AND THEIR RELATED DEDUCTIONS AND EXPENSES. AN OLD ACCOUNTING SAYING, “TAX CODES ARE FOR THE INFORMED, THE UNINFORMED SIMPLY PAY”.

OVER NINETY (90%) PERCENT OF ALL WHO FILE PAY TOO MUCH TAX AS THEY DO NOT KNOW THE TAX CODES. ALTHOUGH THE CODES MAY VARY, YEAR TO YEAR, IT IS NOT TOO DIFFICULT TO MASTER A BASIC UNDERSTANDING. ALL CODES ARE ON THE INTERNET UNDER IRS.COM.

A NEVADA CORPORATION CAN HOLD ITS IRS TAXABLE INCOME AT 15% AND IN MOST CASES ELIMINATES ALL STATE TAXES. NEVADA CORPORATIONS CAN SUBSTANTIALLY REDUCE IRS TAXES VIA ITS ABILITY TO EXPENSE MANY DEDUCTIONS THAT DIRECTLY BENEFIT ITS OFFICERS, AND STOCKHOLDERS, TO INCLUDE, BUT NOT LIMITED TO OFFICER AND EMPLOYEE DEDUCTIONS OF:  (a)  MEDICAL AND DENTAL PLANS, (b) RETIREMENT PLANS, (c) INSURANCE PROGRAMS, (d) COMPANY VEHICLES, (e) ENJOYABLE “GET A WAYS” IN CONJUNCTION WITH BUSINESS TRIPS (f) AND MANY, MANY MORE AS THEY MAY BE APPLICABLE TO YOUR PARTICULAR BUSINESS AND COMPANY.