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Year end is almost upon us, but there’s still time for your wholesale business to take advantage of savings opportunities, if you conduct tax planning now. Here are three strategies to consider:
If you expect to be in the same or a lower tax bracket next year, time expenses and income to defer tax:
If, however, you expect your company to be taxed at a lower rate this year, reverse the strategies above for realizing expenses and income.
The manufacturers’ deduction helps manufacturers remain competitive with foreign companies by providing significant tax savings on qualified production activities income. However, beyond traditional manufacturing, the deduction also may apply to a broad range of non-manufacturing businesses. For instance, it may encompass related activities that a wholesaler or distributor may engage in, such as processing.
The applicable deduction remains at 9 percent for 2012. The percentage applies for both regular and alternative minimum tax purposes, but the deduction amount is limited to 50 percent of the qualified production wages you pay to employees during the year.
Taking advantage of this deduction is complex, and careful record keeping is essential to properly calculate and allocate expenses.
Sponsoring a retirement plan for your employees can reduce your company’s taxable income in addition to helping you attract and retain workers. You can deduct your contributions and also potentially qualify for tax credits and other incentives for starting a plan. Also, your employees benefit from tax-deferred growth on plan assets.
The deadlines for establishing and making contributions vary based on the plan type, with some falling after year-end. But for accrual purposes, determine the contributions you must make before year end.
Doeren Mayhew’s Troy, Houston and Ft. Lauderdale CPAs specialize in the wholesale industry, offering traditional CPA services as well as providing insight into how to run a more profitable operation. For more information, contact us.
This publication is distributed for informational purposes only, with the understanding that Doeren Mayhew is not rendering legal, accounting, or other professional opinions on specific facts for matters, and, accordingly, assumes no liability whatsoever in connection with its use. Should the reader have any questions regarding any of the news articles, it is recommended that a Doeren Mayhew representative be contacted.
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