According to the US Chamber of Commerce, “Tax preparation is an ongoing process, and CO-’s expert panel agreed that business owners should be meeting with their accountant and bookkeeper regularly. Providing them with accurate, updated financial records allows your accounting team to develop a strategy and reduces surprises when filing taxes.” This call to normalcy reminds business owners that tax for 2022 is, and will be, a vital part of business operations. However, no business owner wants to pay more tax than necessary. It is therefore important to adopt a clear tax strategy within 2022.
Robert Cannon, AIFA states that the company is composed of ‘fiduciary financial advisors.’ They outline that, “a fiduciary financial advisor is held to the highest legal and ethical duty to represent his clients’ best interests regarding their total asset portfolio management.” As the leader, Robert Cannon operates as both a CFO and a lead advisor. Cannon has over 30 years of experience working with investors, businesses, and clients from the US.
Tax Strategies for Business Owners
A good way to reduce tax and approach tax strategically is to invest in and develop a retirement plan. Traditional and approved 401(k) plans are considered ‘pre-tax.’ This means that contributions to these plans are exempt from income tax. However, upon withdrawal, consumers will pay tax. Notably, this rate is often lower within the retirement period. Contributions to retirement plans reduce overall available income on a monthly basis. This means that taxable income is reduced. This is a clear way to limit the amount of tax paid per month. This is especially beneficial for higher earners, as the larger the tax bracket, the larger the savings.
Robert Cannon has focused on retirement planning and investment for his clients, as he believes this is a vital area for, “lifelong wealth generation and management.” With this in mind, he has helped innumerable clients find success. When approaching retirement planning, Cannon believes the first question should always be: “What lifestyle do you want to live?” This question, and its answer, will ultimately dictate any and all methods for accruing wealth and saving for retirement. In any case, retirement planning is an effective and beneficial way to strategically manage tax.
According to HSABank, there are three tax benefits of contributing to HSAs, “Contributions to HSAs are not subject to federal income taxes. Earnings to an HSA from interest and investments are tax-free. Distributions from an HSA to pay for qualified medical expenses are tax-free.”
This makes contributions to HSAs an often overlooked and under utilized tax strategy. Not only is this a good decision for employees, it also eases tax obligations for businesses. Employers and business owners can begin this process by strategizing a contribution plan for employees, and by setting aside an amount for this process. Like with retirement planning, this tax strategy offers multiple benefits for owners and employees.
Investment Tax Planning
Cannon states that, “the first step towards investment tax planning is knowing, and understanding, your tax bracket.” This is a vital step, as professionals are thereafter able to navigate tax and investment planning on the behalf of any business owner. Cannon suggests that businesses hire a dedicated team or professional that can devote time and effort into devising and implementing a clear investment tax plan. Cannon believes that this is the best way to ensure that business owners are only paying the tax that they are required to, and no more.
Cannon further states that, “with successful investments, saved and accrued wealth can ensure that more wealth is made over a period of time.” Cannon, as an advisor, argues that financial advisors are best equipped to ensure that clients’ money is managed and protected. When business owners understand their tax, and utilize the aid of advisors, they are able to reduce their tax burdens and make the most appropriate decisions for their wealth.
Tax is a necessary burden for consumers, employees, and business owners alike. Businesses can ensure that they pay only the tax that is legally necessary, by strategizing and implementing effective tax strategies. Robert Cannon, as a financial advisor and retirement planning expert, highlights that retirement planning, HSA contributions, and investment tax planning, are effective ways of reducing overall tax burdens for business owners. Two of these strategies, retirement planning and HSA contributions, positively impact the lives of employees and owners in the long run. They do this whilst simultaneously reducing tax obligations.