Based in Orange County, Mark Ziebold leads a law firm that offers knowledgeable counsel in areas such as estate planning and corporate and partnership law. Among Mark Ziebold’s areas of extensive experience is in enabling small businesses to save money through avoiding the overpayment of income taxes.
One aspect of these tax minimization strategies has to do with the structuring of the business itself, with S-corporations or pass-through entities offering distinct advantages. In particular, the S-corporation allows a significant percentage of earnings to pass through the business and be distributed as distributions. Both the S-Corporation and partnership taxed entities such as a multiple member partnership also qualify for the new Section 199A decuction for qualified business income (subject to certain limitations depending on the type of business).
This reduces exposure to the Federal Insurance Contributions Act (FICA), which requires that employers withhold Social Security and Medicare tax from wages paid to employees. Setting up payment through dividends decreases FICA-eligible wages, as the employer portion of FICA taxes is paid only on the income taken as salary.
Other strategies for reducing taxes through S-corporations, LLCs, and partnerships include charitable contributions. With the business contribution passed through to the business owner, the deduction can be claimed on the individual's tax return.
