April is tax season – which could be a good or bad thing depending on whether you’re expecting to receive a refund from the IRS or relay a hefty payment to Uncle Sam. Regardless of whether you’re sending or receiving a check this April, it’s important to know all of the tax benefits and breaks available to your specific tax situation. Are you single? Married? Do you own a business? If the answer to the last question is yes, definitely talk to your CPA before filing your taxes. In the meantime, here are some of the top tax benefits available to business and franchise owners:
One of the best parts of being a business owner is that there are all sorts of tax benefits and tax breaks to take advantage of come tax season. Which ones you choose to use and how much you can deduct depends on a great number of factors, including how your business is structured. For reference, a business can be structured as a sole proprietorship, LLC, partnership, cooperative, C Corporation, or S Corporation, each having different rules and rates for taxation. Additionally, certain laws regarding business entity taxation are at the state level, meaning how a business is taxed in California isn’t the same way it would be taxed in New Hampshire, for instance.
That being said, some of the more common general tax benefits for business owners include the ability to write off expenses such as office rent and equipment, as well as the fact that interest on loans is fully deductible. In addition, you can also expense items and actions that are typically utilized for personal use, such as your vehicle or a vacation, as long as you’re using them for business purposes and following IRS guidelines. All and all, the more legitimate tax deductions you take as a business, the less taxable profit there is leftover for the government to tax. Translation? More money in your pocket come April.
When a new tax cut is passed in congress, it’s often difficult to discern the exact effects it will have on you, your family, and your business. And in the era of fake news and partisan politics, it’s nearly impossible. While some families may in fact save thousands of dollars in the first year of tax cuts as we’ve been told, it’s impossible to calculate exactly how much the average individual or family will save overall. However, here is what we do know about the tax cuts and how they affect franchisees and business owners. The new tax cut permits pass-through companies to deduct 20% of income, allows for the immediate deduction of equipment, and changes the way interest is expensed. All of these changes to the corporate tax code, in addition to the reduction in individual tax rates, provide franchise owners with significant benefits that they’ll start seeing as soon as the Spring 2018 quarter.
Being a business owner and more specifically a franchise owner has all sorts of benefits in itself, from being your own boss to having more control over the daily decision-making process of your company. But when you add in the additional financial perks that come along with owning a franchise including tax benefits, tax breaks, and more profit on average — well, then becoming a franchise owner is a no-brainer.
Are you already a business owner who wants to learn more about franchising and its financial benefits? If so, click here to download our FREE starter kit today for more information!