Ready to launch: A Founder’s guide to managing taxes
Getting ready to start a new business?
Before earning your first dollar, you should make tax mitigation and management strategies a priority. Planning for income taxes at the launch of your new business may reduce capital gains tax and transfer taxes. Remember, it’s not what you “make” but what you and your family “keep” after taxes that is important to building and sustaining your family’s wealth and legacy.
Many founders devote so much time and energy to getting their businesses off the ground that they inadvertently neglect to focus on their personal income tax and wealth transfer planning. Unfortunately, waiting to engage in personal planning until your business is a success, or postponing planning until a buyer approaches you with a promising offer, is often too late to make much of a difference.
“Such delays usually mean that it is either too late to take advantage of certain strategies or the benefits of a strategy are far less significant than if it had been put in place earlier,” says Michael Duffy, Managing Director, Wealth Strategist with Merrill's Strategic Wealth Advisory Group. “Generally, the best time to consider a founder’s personal planning is before the business’ operating entity is even formed,” explains Michael. “For example, selecting the type of corporation, partnership or limited liability company that is used to run your business may result in substantial income tax savings.”
While it may seem premature, putting a team of professional tax and financial advisors in place for your personal needs before you launch your new business can help alleviate the burden of you personally analyzing tax provisions and free up your time so you can focus on your new business enterprise.
Read Ready to launch: A Founder’s guide to managing taxes to review tax mitigation and management strategies that may help to reduce your overall income tax and transfer tax obligations and promote your family’s long-term financial goals.
5 considerations that can help Founders start thinking through a tax mitigation and management strategy for their businesses
- What type of entity offers the best short-term and long-term tax benefits for your needs?
- How can Founders minimize their capital gains taxes when they sell shares?
- Can Founders reinvest their shares to reduce or eliminate capital gains taxes?
- What are the options for managing transfer taxes?
- What are the best ways to take advantage of your lifetime federal gift and estate tax exemption?
It’s never too early for new business owners to create tax mitigation and management strategies.
Your Merrill Private Wealth Advisor can help with tax minimization strategies and can work with your estate attorney and tax professional to help ensure your wealth management strategies are aligned.
A private wealth advisor can help you get started.
Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.