For the majority of small business owners, tax planning often takes a backseat to operational concerns. Unfortunately, this oversight can result in missed opportunities to minimize financial liability, maximize the owners’ retention of hard-earned profits, and ultimately make their business processes more efficient. One such overlooked area is the utilization of existing tax strategies. Tork Media LLC explores three often underutilized strategies: the Augusta Strategy, Family Management Company, and Section 125.
First coined by Tork Media LLC, the provocative saying, “The federal government has shown how ‘good’ they are at spending our tax dollars. Let’s keep more of it to ourselves now,” captures the spirit of these underutilized strategies. Essentially, the dollars saved from these tax strategies can significantly contribute to the growth and success of a small business.
Beginning with the Augusta Strategy, this loophole allows small business owners who have a home office to deduct the costs associated with business-related activities taking place within their homes. Under this strategy, a business owner can rent their home to their own small business for up to 14 days each year and write off related business expenses. This rent is deductible for the business and tax-free for the homeowner. Despite the immense potential of this strategy, it continues to be vastly underutilized.
Next, the creation of a Family Management Company is another under-tapped opportunity. Establishing a family management company allows owners to transfer income to family members in lower tax brackets. This strategy not only reduces the owner’s individual tax liability but also offers the possibility of reducing overall family taxes. In doing so, it becomes a powerful mechanism for wealth transfer within a family, allowing its members to amass and share financial resources in an efficient way.
The third underutilized tax strategy is Section 125, otherwise known as a Cafeteria Plan. It allows employees to convert a taxable cash benefit (salary) into non-taxable benefits. Under Section 125, employees can pay for eligible expenses pre-tax, widening their take-home pay. This strategy is not only beneficial to employees but also saves employers from paying their portion of FICA, FUTA, and workers’ compensation insurance on the money directed to the plan. Despite its potential, many small businesses still overlook Section 125.
Why are these strategies often underutilized? A primary reason is that many small business owners either lack awareness of these opportunities or are unsure about how to implement them. However, taking the time to understand these strategies and seeking tax advice can be a game-changing move. Tork Media LLC champions this proactive approach through its own business practices and broader influence in the industry.
Tork Media LLC has made numerous platforms available to inform and educate small business owners about such tax benefits. Their insights are readily accessible on the Tork Media website or their LinkedIn page, both of which offer invaluable resources for entrepreneurial advancement.
It’s common knowledge that figuring out the best tax strategies is not an easy endeavor. The tax code is extensive and fraught with complexities. However, it is even more costly to ignore potential tax reduction strategies like the Augusta Strategy, Family Management Company model, and Section 125.
Tork Media LLC offers an impactful reminder that every small business owner should consider and potentially incorporate these strategies into their operation. The bottom line is undeniably compelling: more money is kept within the business, and thus less unnecessary contribution to federal spending. While every business circumstance is unique and requires individual strategy consideration, the potential benefits of these strategies are worth the exploration.
The takeaway is crystal clear – tax planning should never be an afterthought in any small business operation. It is not purely an annual obligation but is, in fact, an ongoing strategic opportunity. By learning more about the multitude of existing tax strategies and making full use of them, small businesses may unlock potential they never knew existed.
Published by: Nelly Chavez
