Tax planning services that start before the year ends
By the time you file your return, almost every number on it is already fixed. The decisions that lower your tax happen during the year: how much to pay in estimates, how your business is taxed, when to buy equipment and whether to fund a retirement plan. That is the work our tax planning services cover.
We work with small business owners and self-employed people in Rochelle Park and across Bergen, Passaic, Essex, Hudson and Morris counties, and online with clients across the U.S. Your dedicated specialist plans with you during the year and prepares your returns afterwards, so the plan and the return match.
What business tax planning includes
Quarterly estimated taxes
If tax is not withheld from your income, you generally pay it during the year in four estimated tax installments, due April 15, June 15, September 15 and January 15 of the following year. Individuals usually need to pay estimates if they expect to owe $1,000 or more after withholding and credits. New Jersey requires estimated payments when you expect to owe more than $400 in New Jersey tax (NJ-1040-ES instructions).
Paying too little brings an underpayment penalty. You can generally avoid it by paying at least 90% of this year’s tax, or 100% of last year’s tax (110% if last year’s adjusted gross income was above $150,000), as the Form 1040-ES instructions explain. We calculate both, set your payments and adjust them when your income changes.
Entity choice and S-corp timing
How your business is taxed affects how much of your profit is subject to self-employment tax. A single-member LLC is taxed on Schedule C by default. An LLC or corporation can elect S corporation status, which can lower self-employment tax once profit is high enough. In return, owners who work in the business must pay themselves reasonable wages through payroll, and the company files its own return.
The election has a deadline: under the Instructions for Form 2553, Form 2553 is generally due no more than 2 months and 15 days after the start of the tax year it should apply to. We model the numbers with you first; if the election makes sense, our S-corp election service files it and our payroll services handle the owner’s salary. Entity choice is part of tax planning, and we look at it from a tax point of view.
Retirement contributions as a tax decision
Contributions to retirement plans for self-employed people, such as a SEP, a SIMPLE IRA or a one-participant 401(k) (see Retirement plans for self-employed people), are generally deductible and can reduce this year’s taxable income. We calculate how a contribution would change your tax and when it has to be made. Choosing investments and planning your retirement are personal financial planning, which we do not provide.
Year-end tax planning
In the fall we review your year-to-date books, project your tax for the year and look at the options still open: timing of income and expenses, equipment purchases, owner payments, contractor and payroll filings, and a final estimated payment. You get a short written summary with the numbers.
What a planning engagement looks like
Planning works best as a few check-ins spread over the year: early on to set estimated payments, mid-year to compare them with actual results, and in the fall for year-end decisions. We agree the schedule with you. Between meetings you can ask questions by email or phone, for example before signing a lease, buying a vehicle for the business or hiring your first employee. Every recommendation comes with the numbers behind it, so you can see what each option costs and saves.
How tax planning fits with your returns
Planning only works with current numbers. That is why most planning clients also have us keep their monthly bookkeeping. The plan then feeds straight into the business tax return and the owners’ individual tax returns, so nothing is planned on one set of numbers and filed on another.
Who benefits most
- Self-employed people whose income grew and who now owe a large balance each April.
- LLC owners asking whether an S corporation would save them money.
- Owners of more than one business, or with income in more than one state.
- New business owners who want to set up estimated payments correctly from the first year.
If you are an owner of a local company, see how we work with small businesses, or see everything we offer on our tax services page.
Rental property owners have their own planning questions, from depreciation to how income is reported; see our page for real estate investors.
Tax planning is quoted individually up front and can be combined with bookkeeping and returns. Book a free call to talk about your year.
