- June 4th, 2013
- John Dillard
- Income Tax Preparation of Corporate & Personal Income Taxes, Virtual CFO, Business/Tax Consulting, Financial Planning, Business Loans & Money Management
The train is leaving the station and it is well past time to get on. Accordingly we advise our clients to at least formally twice annually to prepare a written tax plan so as to ensure there are no undue surprises at the end of the year. If you are a business owner of an LLC, an S Corporation, a Partnership or a proprietorship it is essential to work closely with your CPA on this most important tax issue. The below is a sample letter we might send to a client detailing the results of their tax planning:
Based upon your advice that:
Your anticipated current taxable income will be approximately the same as the prior year we adjusted your monthly federal and state withholding for the rest of the year and doing a larger paycheck now to get your year to date federal withholding in line.
The federal withholding amount we established for your new monthly payroll can be used for next year if its estimated taxable income is anticipated to be approximately the same as in prior years whereas the total state withholding amount should be adjusted to $1,000 monthly .
You anticipate your other income, itemizations and exemptions to be approximately the same as the prior year
This is to confirm that your marginal tax rate for the IRS & GA is 28% and 6% respectively.
Please be sure to forward to me a copy of your year to date check stub after you do your next regular monthly paycheck and the larger catch-up paycheck to get your year to date withholding in line and to withhold for the Owner 401K amount.
That after you withhold this from his paycheck and that you are going to fund this along with a check with $20K of funds from the business as the employer portion for a total of $37.5K to the broker of your owner 401K funds. Please note the overall limit for 2013 from all sources (employer and employee combined) for 2013 is $51,000.
To learn more:
Year End Tax Planning: What Businesses Should Do Now
If you fail to plan, you are preparing to be surprised. Learn how you can get ready now for your year-end liability and survive the year-end tax preparation process. Visit http://www.hiscpa.com/year-end-tax-planning.html
Should You Maximize Profit or Work to Pay Fewer Taxes?
Tax Planning is an art under-girded by the science of the tax code and proper planning. Learn what you need to know to be a wise and judicious steward of your business. See http://www.hiscpa.com/profit-maximization.html