By Michael Funaro, Westpac Wealth Partners
It’s that time of year – tax season. Whether you requested for an extension or have filed, taxes are on the mind of business owners. Recent years have shown that educating our future and current clients about Tax Efficiency is relevant and valuable. Tax efficiency is simply an attempt to minimize your tax liability when given different financial decisions. To be tax-efficient, the tax outcome must be lower than an alternative financial structure that achieves the same end. From years of planning and thousands of cases, we’ve learned that in some scenarios tax efficiency can outperform your basic rate of return formulas. This is one of many reasons why business decisions shouldn’t be made in a vacuum.
A few key considerations for business owners, golf course owners and property owners will be to evaluate areas such as tax deferral, tax rate arbitrage, wealth transfer, and maximization of tax deductions. One of the easiest ways to reduce your income tax bill is to claim all the tax deductions legally available to your business.
When considering wealth transfer, being properly informed is crucial to making good decisions on how and when to transfer income/wealth-producing property that may pay off in reducing estate taxes. Because the tax laws are ever-changing it is important that you have a qualified professional on your team to mitigate any tax arbitrage and help you come up on top.
Lastly, whether you are a new golf course owner or have been at it for a while, it is key for yourself and your partners to understand the type of entity formation they have in place. We have found the type of legal and tax entity structure may be as important as the industry you are in and the type of business that you operate.