Tampa’s business scene thrives on implementing smart tax strategies! But are you, as a savvy entrepreneur, leveraging all the tax benefits this vibrant city offers? Many business owners miss out on valuable deductions and credits.
This guide dives into powerful “tax optimization” strategies specifically designed for Tampa’s business community. We’ll show you how to maximize your tax savings from a financial planning perspective without compromising compliance, ensuring you keep more of your hard-earned profits fueling your business growth and securing your financial future.
Cracking the tax code in Tampa might not be your cup of tea. That’s where we come in! The financial professionals at Independent Financial Services can help you uncover hidden tax savings opportunities for your business in the Cigar city.
Here are some tax strategies that can help reducing the tax bill of your business in Tampa:
Employ Family Members (Small Businesses Only)
Hiring family members can be a rewarding tactic for small businesses as it can lead to tax cuts. The IRS puts variety of options in this regard, each coming with unique tax cut opportunities. Yes, your children are also eligible for this scheme.
Take, for instance, a sole proprietorship scenario where hiring your spouse is viable. Their earnings will be liable to federal income tax and Federal Insurance Contributions Act (FICA) taxes for Social Security and Medicare, but they’ll be exempt from federal unemployment tax (FUTA) provided they’re formally employed and not designated as a partner in the business.
Maximize Business Expenses
Ever wonder how some businesses seem to thrive even after seemingly high operating costs? Here’s the secret weapon: strategic business expenses can potentially reduce your tax bill! Many everyday costs associated with running your business, from office supplies to travel expenses, can be deducted from your taxable income.
This means the government taxes you on a lower amount, resulting in potential tax savings. By understanding what qualifies as a deductible expense and keeping good records, you can maximize your tax benefits and keep more of your hard-earned profits fueling your business growth.
Fund a Retirement Plan
Funding a retirement plan for you and your employees can also lower your tax burden. You can take advantage of these plans:
One Participant 401k Plan
Solo 401(k)s offer a powerful advantage for business owners like you. These plans allow you to contribute significantly more towards your retirement than traditional plans for regular employees.
- Maximize Your Contributions: In 2024, you can defer up to $69,000 of your income into a one participant 401(k) if you’re under 50. And, if you’re 50 or older, you can take advantage of an additional “catch-up contribution” of $7,500.
- Spousal Coverage: Despite the name, these plans can actually cover both you and your spouse if they work in your business.
- Flexibility: If you have additional employees, you can choose a traditional 401(k) plan instead, offering more flexibility for managing contributions for your entire team.
Simplified Employee Pension Plan (SEP)
Short on time for retirement planning? SEP IRAs offer a breeze of simplicity and a powerful savings advantage for you and your team. Here’s what makes them a great choice:
- Easy Setup and Management: No complicated paperwork or annual filings – perfect for busy business owners.
- Employee Benefits: Unlike solo 401(k)s, SEP IRAs allow you to extend retirement savings benefits to eligible employees, boosting their financial confidence and potentially improving morale. Note: In some cases, offering coverage to employees might be mandatory.
- Generous Contribution Limits: In 2024, both you and your employees can contribute up to the lesser of 25% of compensation or $69,000 to your respective SEP IRA accounts.
- Double Tax Savings: As a business owner, your contributions to both your own SEP IRA and your employees’ accounts are tax-deductible, further maximizing your tax benefits.
Savings Incentive Match Plan for Employees (SIMPLE)
Looking for a user-friendly retirement plan for your small business with 100 or fewer employees? Look no further than SIMPLE IRAs! Here’s what makes them a win-win:
- Easy to Set Up and Manage: SIMPLE IRAs are designed with simplicity in mind, minimizing administrative burdens for busy business owners.
- Shared Savings Opportunity: Unlike other plans, both you and your employees can contribute to SIMPLE IRAs. Employees contribute to their own accounts, and you, as the employer, get to choose your contribution method:
- Matching Contributions: Match up to 3% of what your eligible employees contribute (with a maximum employee contribution of $16,000 for 2024, or $19,500 including catch-up contributions).
- Automatic Enrollment: Contribute 2% of compensation to every eligible employee’s account, regardless of whether they contribute themselves.
- Flexibility for You, Savings for All: This flexibility allows you to tailor the plan to your budget while offering your employees a valuable retirement savings vehicle. Remember, your contributions to employee accounts are tax-deductible, potentially lowering your tax burden.
Work with Us
Navigating the complexities of tax laws can be a draining endeavor for business owners. Let our professionals at Independent Financial Services help you reach maximum tax efficiency, while you put your full effort in growing your business.
Call us today and set up an appointment to find out how you can get the most tax benefits as a business owner in Tampa.
Material provided by Redfern Media, an independent third party. Raymond James is not affiliated with and does not endorse the opinions or services of Redfern Media.
Any opinions are those of the author and not necessarily those of Raymond James. All opinions are as of this date and are subject to change without notice. This material is being provided for information purposes only and is not a complete description, nor is it a recommendation. The information has been obtained from sources considered to be reliable, but there is no guarantee that these statements, opinions or forecasts provided herein will prove to be correct. Changes in tax laws may occur at any time and could have a substantial impact upon each person’s situation. While we are familiar with the tax provisions of the issues presented herein, as Financial Advisors of RJFS, we are not qualified to render advice on tax or legal matters. You should discuss tax or legal matters with the appropriate professional. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including asset allocation and diversification. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members.