Clever Tax Solutions

Below is a guest post by freelance writer Aimee Claire.


The importance of having clever tax solutions

Whether you are an individual working for yourself or are running a large corporation, it is important that you manage your accounts effectively to minimize the amount of tax you are paying. A clever tax solution is not tax avoidance, it is just good management. Paying tax is vital to keep the country running, but it makes no business sense to pay more than you have to.

What is a clever tax solution?

A clever tax solution involves planning your finances and business structure to ensure that you keep your tax bill to a minimum. This is done by taking advantage of all the tax benefits that are available. This is actively encouraged by the government and is why we have a voluntary tax system. Voluntary does not mean that you do not have to pay; it means that you can choose how to manage your business affairs to take advantage of tax benefits.

Clever tax solutions for individuals in Louisiana

A popular and clever tax solution for freelancers and contractors is to operate under an umbrella company. An umbrella company is run by fully qualified accountants for the benefit of clients. The contractor becomes an employee of the umbrella company and pays taxes, as does any other employee of a corporation. The umbrella company invoices the client (the business that the self-employed freelancer is working for), deducts expenses, makes use of all possible tax benefits before deducting tax, and pays the contractor.

The benefits for the freelancer are that they can take maximum advantage of tax benefits and do not need to concern themselves with the accounting process. This frees up more time for working and generating income.

Image by Steve Snodgrass.

Image by Steve Snodgrass.

Clever tax solutions for business in Louisiana

All businesses in Louisiana must file an annual tax return. In addition to this, all businesses operating in Louisiana must file an annual franchise tax report. Franchise tax is based on various company assets at a tax rate of $1.50 for each $1,000 of capital employed in Louisiana.

A good accountant is able to manage company finances to help minimize the amount of franchise tax that needs to be paid.

As well as tax-deductible benefits, the New Markets Tax Credit Program offers tax credits to certain companies in poorer communities. This scheme is designed to aid business development.

New Markets Tax Credit Conference in New Orleans

In October 2013 Novogradac hosted a Tax Credit Conference in New Orleans, Louisiana. The conference discussed the pending legislation to make the NMTC program permanent.

The New Markets Tax Credit Program (NMTC) was established in 2000 to help boost business in low-income communities. Businesses must be a Community Development Entity (CDE) to qualify for the tax credits. Qualifying companies receive tax credits for a seven-year period equal to five percent of the total amount paid for the stock or capital interest. There are many ways a tax credit can be received and a good tax specialist is able to ensure that a company is receiving its full entitlement.