We’re going to assume that to get yourself as profitable as you are, that it has taken plenty of work and a lot of stress. So, when you finish climbing that hill and find that most of the reward of your work is being taken away, it’s easy to get demoralized. You don’t have to stand for it, however. Here are a few ways to ensure more of your profit stays with you as it should.
Make sure your business is structured the right way, first and foremost
When it comes to being a business owner and making sure that you’re getting as much money as you should, this is easily one of the most overlooked aspects. As a business grows, you should be looking to change the structure it’s operating under. While a company is small, it might make sense of have income passed directly to you and taxed individually. As the business grows, however, that rate of personal income means you’re going to be dealing with a much larger tax on you as an individual. Instead, restructuring the business to something like a C corporation could reduce tax on income like your $50,000 from 35% to a much more manageable 15% rate.
Get to know your taxes
The simple, and sad, fact is that most business owners don’t know their taxes quite as well as they should. You shouldn’t feel the need to simply accept the amount that you’re paying at the moment. Instead, you should look into getting the help of a legal tax advisor. There are possible deductions for all kinds of things, from your employment options to even the industry you’re working in. For instance, there are some easily acquired tax breaks for businesses in the industries of manufacturing and construction that you should be investigating.
Keep rolling your investments
If you really want to grow your wealth, then you should be looking at investments. However, when you collect from an investment, you’re likely to lose a big portion of that in taxes. But there are some techniques that allow you to minimize that effect. Using 1031-exchangeable income property, for instance, allows you to invest in a property. When you’re collecting your returns on that profit, you can defer the taxes entirely by putting the profit into another property of the same kind. That way you can keep the building the investment and cut down losses due to tax.
Contribute more of it to the future
The reason most of us should want to see more of our profit is not because we should be trying to live a more extravagant lifestyle. Instead, it’s better to see that you’re well cared for, financially, in the future. Making the decision to put more of your profit towards your retirement than instead of your income could also result in you losing a lot less of it.
Naturally, the options above all depend on what you plan to do with your money. If you want to see the personal benefit of your wealth, then you should put it into your pension. However, if you want to keep more capital to feed back into your businesses and investments, then keeping a rolling investment might work better. Make sure you’re considering your goals with these points at all times.