Businessman, citizen
Donald J. Trump is now President-elect Donald J. Trump. What does this mean for your business going
forward? We will discuss the effects over
the next several postings. Since taxes are on the forefront of every business
owners mind, let’s begin there.
One of the platforms Mr.
Trump ran on was to reduce the PERSONAL income tax brackets. Currently there are seven income tax brackets
with the highest being at 39.6%. The
proposal would call for three tax brackets, 12%, 25% and 33%. There is an additional proposal that would
reduce corporate tax rates from an insane high of 35% down to 15%.
If these proposals become
law and in my humble opinion should, there should be many positive results for
you and your business. First, there will
be more money in your pockets and not Uncle Sam’s. I would encourage you to not only reinvest in
your business but also invest. The stock
market is seeing all-time highs now. I
frequently mention to business owners to never forget the basics. The basics are consider the long term, keep
some money in cash for immediate needs diversify and invest regularly, monthly
being the best option.
Consider three layers of
tax planning for your business. They are
tax me now (dividends and capital gains), tax me later (IRAs and 401ks) and
never tax me (municipal bonds, limited partnerships and Life Insurance). In these three layers, I would spread the wealth
and invest a portion in currently taxable investments with an eye on minimizing
taxes. More about that in a subsequent
article. Next, invest in tax-deferral
such as your IRA and 401k. By the way,
if you are a sole proprietor, you can do a SINGLE 401k. For tax me never, invest in a cash value
driven Life Insurance policy.
Those are the basics and should
serve you well going forward hopefully in a more tax-friendly environment.