PAYING TOO MUCH TAXES? READ THIS! - BY JERRY STEWART

IF YOU’VE LISTENED TO ME VERY LONG, YOU KNOW I HATE PAYING TOO MUCH TAXES. OH YEAH, WE ALL HAVE TO PAY SOME TAXES, THAT’S A BIG PART OF WHAT OUR STATE AND FEDERAL GOVERNMENTS OPERATE ON, BUT PAYING TOO MUCH TAX IS JUST WRONG.

SO FOR ME AND MY CLIENTS I DO EVERYTHING  IN MY POWER AND WITHIN THE BOUNDARIES OF THE TAX CODE TO SEE THAT EVERY LEGAL ADVANTAGE IS TAKEN. AND ONE OF THE VERY BEST WAYS YOU CAN SAVE MONEY ON YOUR FEDERAL TAXES IS TO MAKE SURE YOU ARE NOT FILING YOUR BUSINESS AS A SOLE PROPRIETORSHIP. ALLOW ME TO EXPLAIN WHY.  

WHEN YOU FILE YOUR TAX RETURN AS A SOLE PROPRIETOR, YOU REPORT ALL YOUR FARM PROFIT AS EARNED INCOME AND ALL EARNED INCOME IS SUBJECT TO SELF EMPLOYMENT TAX. THIS SELF EMPLOYMENT TAX IS THE ROUGHLY 15% TAX WHICH GOES TO THE SOCIAL SECURITY ADMINISTRATION FOR YOUR SOCIAL SECURITY AND MEDICARE TAX. IF YOU MADE ENOUGH PROFIT ON YOUR FARM THAT YOU FIND YOURSELF FILING PART OF YOUR INCOME TAXES IN THE 25% TAX BRACKET, THEN THAT 25% TAX COMBINED WITH YOUR 15% SELF EMPLOYMENT TAX IS A WHOPPING COMBINED TAX OF 40%. THAT’S JUST TOO MUCH. AND FACE IT, YOU CANNOT EXIST IN BUSINESS WHEN YOU HAVE TO PAY SO MUCH IN TAXES. 

   SO, JUST WHAT’S THE SOLUTION? ONE VERY POWERFUL SOLUTION IS TO CHANGE YOUR BUSINESS STRUCTURE BY BECOMING A SUB CHAPTER S CORPORATION. NOW THERE’S NOT ENOUGH TIME HERE TO GIVE YOU ALL THE TAX  ADVANTAGES OF THE SUB CHAPTER S, BUT ALLOW ME TO GIVE YOU THE SHORT OF IT - WHEN YOU FILE YOUR BUSINESS AS AN S CORPORATION,THE IRS ALLOWS YOU TO RECOGNIZE PART OF YOUR INCOME AS EARNED, BUT MORE IMPORTANTLY, IT ALLOWS YOU TO RECOGNIZE SOME PART OF YOUR INCOME AS WHAT I CALL “PROFIT TAKING”, WHICH IS NOT EARNED INCOME AND, THEREFORE, IS NOT SUBJECT TO SELF EMPLOYMENT TAX.  

SO IF THIS LAST YEAR YOU HAD ENOUGH TAXABLE INCOME IN YOUR BUSINESS THAT WOULD ALLOW YOU TO SHELTER, SAY $50,000 FROM SELF EMPLOYMENT TAX, YOU WOULD SAVE A WHOPPING $7,500 ON YOUR TAXES. MULTIPLY THAT OVER THE YEARS AND IT’S A LOT OF MONEY.    

 THERE ARE ALSO SOME SERIOUS LIABILITY ISSUES FOR YOUR BUSINESS THAT THE S CORPORATION COULD HELP YOU WITH, SO I HIGHLY SUGGEST YOU CHECK THIS OUT NOW.   

IF YOU WANT TO KNOW MORE ABOUT THIS IDEA OF BECOMING AN S CORPORATION, JUST SEND A SELF ADDRESSED STAMPED ENVELOPE TO ME AT “ITS YOUR MONEY”, 1843D FRONT STREET, LYNDEN, WA 98264. AND I’LL SEND YOU FURTHER INFORMATION. UNTIL NEXT TIME DON’T FORGET - ITS YOUR MONEY.