Page 195 - DCOM508_CORPORATE_TAX_PLANNING

Corporate Tax Planning

Notes health care expenses are often deductible especially for the owner and dependents. In addition,
any contributions made to a health savings account are also deductible expenses. Business tax
planning includes knowing what plans provide the greatest benefits and implementing those

plans to not only provides benefits to the company but benefits to employees as well.
When starting up a company many of the initial expenses can be written off up to a certain
dollar amount. Some of these may include personal property like furniture or offi ce equipment.

Other things that can be written off the first year of purchase include machinery, fi xtures, storage
facilities, and other personal property. Other considerations when starting up a business include

travel, vehicle usage, home office, and uniforms. Corporate tax planning sources suggests making

sure that write-offs are legitimate business expenses. When using a home office for company use
only a percentage of expenses can be written off. Travel expense can only apply when the travel
is for the company. Combining company business with personal business must be taken into
consideration for any type of write-off to be legitimate.
There is a degree of burden that is felt from tax legislation by any and every owner. However,

there are positive ways that a corporation can comply with obligations and find ways to develop
a strong company otherwise. Business tax planning includes taking advantage of opportunities
to provide relief when possible. A corporate planning attorney can provide some good advice
on how to structure a company to be optimally successful while remaining compliant with
considerations such as paying taxes. Information can be found on the Internet that can help
prepare a new business owner with how to be compliant in every area when it comes to reporting
income and deducting expenses.

Task You are an individual who wishes to know the most suitable form of organisation
among Sole Proprietorship, Partnership and Company. How would you deal with the
following questions which are given below?
1. What is the most appropriate structure for me, should I become a company?
2. Should I employ my spouse or children or bring them in as partners?
3. I am a partnership, what about introducing a company as a partner. What are the

benefits and downsides?
Charitable contributions are a great way for a company to save on taxes and help those in the
community. Many non profit organisations are set up to help those who are less fortunate within

the community that they reside and some offer services to anyone who they can help no matter
where they are located. There are limits on how much of a contribution that can be counted and
the organisation has to fit the guidelines used by the IRS to be considered a legitimate charitable

organisation. Some of the ones who usually do qualify are churches, educational companies,
scientific or medical research institutions, those that provide true charitable services and

organisations who help animals. There is more information on the Internet about organisations
that truly qualify as charitable.
Self Assessment

State whether the following statements are true or false:
13. It is the shareholders in the company directors who in turn will appoint managers for the
day to day running of the business.

14. Maximising the tax liability can provide more funds for the company and it can especially
be useful in case of small businesses in need of more money than established fi rms or
organisations for expansion of their activities.

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