Financial Management Archives - The C.P.A. Partner to Growing Businesses

3 Reasons to Pay a Higher Salary as a S-Corporation Owner

admin — Mon, 17 Jan 2022 17:38:53 +0000

In this article, we give some ideas you can take into consideration when determining your salary as an S-Corporation owner. These suggestions are based on you already having a basis for determining what your reasonable compensation range would be based on the factors we discuss in our previous article, “Reasonable Compensation – What No One is Talking About”.

1. Consider pension benefits your S-Corporation can pay you. For example, if your S-Corporation creates a SEP IRA retirement plan, your company would be able to contribute a deductible, 25% of your compensation or a maximum of $61,000 (for year 2022). If your salary is too low, however, you can’t maximize your pension benefits.

2. Check with Social Security to determine if you have paid in enough credits to be eligible for benefits. Second, the amount of your benefits takes into consideration your highest 35 years of salaries. If your income has been low, then you can consider taking a higher salary to help increase your future benefit amount.

3. The amount of payroll taxes is most often considered with many S-Corporation owners seeking to keep this amount as low as possible. Consider if your reasonable compensation range is $130K to $150K, the maximum amount of wages you’ll pay social security tax of 6.2% on is $142,800. Over this amount, you will continue to pay Medicare tax of 2.9%. However, if paying yourself over this amount will increase your pension contribution, you could save up to 37% in taxes since your S-Corporation will be able to deduct the amount of its’ contribution to the pension.

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Lower Your Taxes By Giving Charitable Gifts

admin — Fri, 10 Dec 2021 16:32:19 +0000

Am I able to write off my donation?

This is a common question that generally is not asked until it’s too late. Many dollars have been lost because the necessary financial records required to qualify for such tax saving actions were not maintained and/or proper documentation was not provided at the time of donation. To help you avoid losing out on these tax benefits, we have outlined some tips to help you capitalize on such a common, but often misunderstood tax shelter that makes a difference come tax time.

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5 Steps to Protecting Your Business

admin — Thu, 09 Dec 2021 00:30:49 +0000

Every year small businesses become victims of employee theft. This is particularly true in small business environments where a single employee manages all the finances. Often, there are no “checks and balances” in place to verify the accuracy of certain transactions performed by such employees. It is important to protect your assets of your small business, your biggest asset being your cash. Here are some simple steps you can take to accomplish this task:

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What Kind of Business Should Your Start-Up Be?

admin — Thu, 09 Dec 2021 00:30:39 +0000

Now that you have made the decision to become an entrepreneur, usually the next decision is determing the kind of business you will have. Should your business be a C-Corporation, S-Corporation, or a Limited Liability Company? These options each come with there own tax and legal implications that should be taken into consideration.

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6 Steps to Managing your Finances

admin — Thu, 09 Dec 2021 00:30:39 +0000

One common challenge amongst individuals is making the most of every dollar they earn – money management. Even the most educated persons find themselves struggling with improving their finances. While there are many reasons for this, one primary cause would be our upbringing (what we were taught about the utilization of money) and habits we have formed over our life span based on what we have witnessed from others we’ve come into contact with. This is actually great news because good habits can be re-enforced and bad habits can always be transformed into good ones.

This guide will identify six steps (or new habits) you can take to be on your way to improving your personal finances. Well, let’s get on with it!

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3 Steps to Getting Back on Track with Your financial plan

admin — Thu, 09 Dec 2021 00:30:39 +0000

Sifting through an overabundance of financial information available can make finding the solutions that best suit your overall financial plan challenging and difficult. However, making solid decisions about how to accomplish your long term objectives should not be a nerve wrecking process that ultimately makes you insecure about your choices. This article will give you three key principles you can follow to make sure you navigate these complexities successfully.

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