For the managing director of the company or business owners Paying taxes is still a complicated matter. The economical approach or tax deduction is something that many people are interested in having the right tax planning in the first place will help pay taxes properly.
If we are part or all in the management of the business, I believe that many people are worried that they will have to pay tax for both corporate and natural persons who are afraid that they will pay double, which are different parts. Therefore, figuring out how to get a tax break is a more appropriate option. how can this be done?
The first thing to understand is…don’t use your expenses for the business.
Many times, business owners try to avoid taxes by making the numbers at a loss, regardless of the nature of the business. Making a loss figure doesn’t mean no tax will occur. And even more dangerous is the use of personal expenses in business. which the Revenue Code or the tax law clearly stated Non-business expenses cannot be treated as expenses. (Prohibited expenses) Therefore, the owner of the company must distinguish between Personal expenses and the company are strictly separated from each other. Profitable expenditures for the company It can be used as an expense of the company correctly.
Business Owner Tax Deduction Methods That Can Be Done
1. Expenses for the salary of the Managing Director of the Company
Separating the owner’s wallet from the business is good money management. The matter of the business owner’s payroll tax planning can be used as a tax expense. Which must be documented, resulting in less tax business But salary income will have to pay personal income tax. If the company pays a reasonable salary then the owner does not have to pay income tax on this part. or use various discounts to help manage as well In addition to being a tax deduction for the company Business owners can spend with peace of mind without having to worry about being traced back.
2. Fuel cost can be used for a tax deduction
Liaison with people or agencies on important matters It is another process for company directors or business owners. Even if the car used is not in the name of a legal entity. can bring the cost of fuel to be recorded as a tax expense If such refueling is used for the operation of the business not for personal use Juristic persons must keep evidence to be reliable for the inspection of the Revenue Department officials, such as to request forms and travel records. Fuel receipt indicating the name of the vehicle owner and registration number
3. Make life insurance, the tax deduction for company directors
Another way to reduce the tax that provides life protection. and the company can also take all the life insurance premiums issued It comes down as an expense of the company in calculating net profit to pay full corporate income tax as well. under the condition that
- All managing directors must It is not an expenditure of a personal nature or a gift of affection. and must have appropriate appropriate life insurance premiums
- Meeting agendas must be recorded in detail. Resolution of the company’s meeting And the company’s regulations must be written.
- Accounting evidence must be properly recorded. and complete document storage
However, the amount of life insurance premiums paid by the company on behalf of the directors as an added benefit that directors receive is considered income under tax law. The directors must be included in the calculation to pay personal income tax as well. Caution is that even if it helps to manage corporate income tax. But it may be throwing the burden on some directors who are already earning quite a lot of tax at a rate of more than 20% instead.
4. Payment of profit sharing, bonus
bonus payout business would mean good performance But it’s not that in any year there is a profit, it pays. In any year, the loss is not paid. Because the IRS will view the bonus paid as a pre-tax expense. and it has been taken as an expense that has been deducted from profits It is not considered an expense that must be added back. causing the need to pay more corporate tax If correct, a board meeting should be held. Set clear rules for paying compensation. where evidence must be brought in for approval from the shareholders’ meeting again In the case of payment to the Managing Director of the Company for the management to achieve its goals and for the best benefit of the organization If the company does not determine to pay from the profit received at the end of the accounting period The company can bring extra compensation and bonuses. to be considered as an expense in calculating net profit to pay the corporate income tax of the company It is not considered a prohibited expenditure under Section 65 Ter of the Revenue Code in any way.
Business owners who have devoted themselves to the establishment of a juristic company would take into account the maximum benefits that the company will receive Because that means business growth. in addition to administration, Of course, the matter of tax law is quite a detail that must be understood. For people who are just starting a business Cost reductions are essential. The more you save on taxes That means the more profit of the business will increase accordingly.