Don’t miss the opportunity for strategic tax planning with entrepreneurs

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Entrepreneurs have many tax changes to consider in 2021 that could have a significant impact on their financial lives, according to Sean Gould, senior wealth management strategist with national firm Waddell & Associates Wealth Strategists.

“There are a lot of moving parts in tax strategy right now,” Gould said in an interview Thursday, meaning “there’s a lot of money at stake.” Advisors can help their clients who own small businesses reap profits by knowing about changing tax laws, he added.

One of the main issues that Waddell & Associates advisers are currently discussing with their clients is their ability to use both the paycheck protection program under the Federal Pandemic Stimulus Act, as well as the employee retention tax credit. In 2020, small business owners couldn’t take advantage of both. Both programs are designed to help people keep their jobs during pandemic shutdowns.

“In addition, last year, loans under employer programs were capped at 50% of employees’ eligible salary. This year, it is increased to 70%, ”he said.

Gould noted this as an example of the many provisions advisers should be aware of in providing the best advice to their business owner clients. Gould specializes in advising small business owners, which is a tradition within the firm. The company and Gould also work with endowments, foundations, retirement planning, estate planning and investment management.

Many of the other important questions for small business owners revolve around possible future tax increases.

“Business owners may want to increase revenue as much as possible for this year and defer spending until next year to take advantage of the fact that business taxes could potentially be increased under President Biden,” said Gould. “People should also consider reaping gains on stocks this year rather than next year when capital gains taxes could double.”

Likewise, larger donations can now be made without being subject to donation taxes than will likely be allowed next year. “For giveaway purposes, it would be advantageous for wealthy people to give a giveaway this year,” Gould said.

Business owners who are considering setting up retirement plans for their employees should consider doing so now, while some of the start-up costs may be deducted from taxes, he added.

“Congress is good for small businesses right now, and business owners should be prepared to take advantage of whatever programs they can,” Gould said. Despite the pandemic, in some ways it can be a good time to be in business, he added.

“Business owners need to make sure they have the right team in place to guide them,” advised Gould. “At Waddell & Associates, we see ourselves as business coaches. “

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