When you run a solo company, every dollar you earn is also your tax bill. The good news is that the tax code is full of opportunities to reduce that burden, provided you plan ahead and stay on top of deadlines. Here is a practical guide to proven methods that can help you keep more of your hard‑earned money.
- Select the Appropriate Business Structure
Your legal form determines how you’re taxed. Sole proprietorships are simple but expose personal assets to liability. If you’re comfortable with extra paperwork, consider forming an LLC or an S‑Corporation.
- LLC: Gives liability protection and flexible profit‑sharing. Income passes through to your personal return, avoiding double taxation.
- S‑Corp: Allows you to pay yourself a reasonable salary (subject to payroll taxes) and take the rest as dividends, potentially saving on self‑employment tax.
- Boost Deductions Early
The earlier you spot deductible expenses, the more you can lower taxable income. Common deductions for solo entrepreneurs include:
- Home office costs (a share of rent, utilities, insurance, and internet).
- Vehicle mileage or actual vehicle outlays if you use a car for business.
- Professional services: legal, accounting, consulting fees.
- Health insurance premiums paid directly by the business.
- Retirement contributions (IRA, Solo 401(k), SEP‑IRA).
Preserve meticulous records—digital receipts, mileage logs, and a dedicated expense spreadsheet—so you can justify every deduction if the IRS asks.
- Take Advantage of the Qualified Business Income Deduction
Section 199A provides that many small businesses can claim up to a 20% deduction on qualified business income. The deduction phases out for higher‑income taxpayers, but it can still cut a sizeable portion of your liability if your earnings are within the threshold.
- Postpone Income, Accelerate Expenses
Tax timing is a seldom‑used strategy. If you anticipate being in a lower tax bracket next year—maybe due to a dip in business activity—consider deferring invoicing until January. In contrast, acquire necessary equipment or pay for software subscriptions in December to claim the full deduction this year.
- Use Depreciation and Section 179
Big purchases such as computers, office furniture, or a new machine can be written off over several years through depreciation. Section 179 allows you to deduct the full cost of qualifying equipment in the year it’s placed in service, up to an annually changing limit. This can yield a massive immediate tax advantage.
- Handle Payroll Taxes
If you operate as an S‑Corp, you must pay yourself a "reasonable salary." The IRS scrutinizes this closely; a salary that's too low can trigger penalties. When you establish a defensible salary, the remaining profits are taxed only once, at the corporate level, and then at your personal rate on dividends, which are exempt from self‑employment tax.
- Maximize Retirement Contributions
Solo retirement plans such as a SEP‑IRA or Solo 401(k) let you contribute up to 25% of your net earnings—often exceeding the limits on a traditional IRA. Contributions are tax‑deferred,
法人 税金対策 問い合わせ and you can also claim a tax deduction for the contributions.
- Take Advantage of Health Savings Accounts (HSAs)
If you have a high‑deductible health plan, an HSA gives triple tax advantages: contributions are tax‑deductible, growth is tax‑free, and withdrawals for qualified medical expenses are tax‑free. The contribution limits are generous and can be a powerful way to lower taxable income.
- Keep Up with State and Local Rules
Many states provide small‑business tax credits, research and development incentives, or low‑income tax rates for sole proprietors. Check your state’s department of revenue website or consult a local tax professional to ensure you’re not missing a credit.
- Schedule Estimated Taxes
One‑person companies often pay taxes quarterly via estimated tax payments. Failing to pay enough can trigger penalties. Follow the IRS’s "Safe Harbor" rule: pay at least 90% of the current year’s tax or 100% of the previous year’s tax (110% if your income exceeded $150,000).
- Evaluate a Tax‑Efficient Business Expense Strategy
Some expenses are more tax‑efficient when considered capital expenditures instead of current expenses. For example, buying a computer can be capitalized and depreciated, whereas purchasing office supplies is a current expense. Recognizing these nuances can affect when and how you record costs.
- Monitor Emerging Tax Laws
Tax laws evolve. For example, recent proposals to adjust the deduction for business interest or modify the thresholds for the Qualified Business Income deduction could impact your strategy. Keep informed via reputable news outlets, IRS updates, or by maintaining a relationship with a tax advisor.
- Work With a Qualified Tax Professional
Although DIY software can manage basic filings, a seasoned CPA or tax attorney can uncover deductions you might miss, advise on legal structures, and help you navigate complex areas such as payroll and retirement plans. Professional advice costs are often offset by the tax savings they secure.
- Record Your Reasoning
In the event of an audit, having a clear, logical rationale for your deductions, business structure, and income deferrals simplifies the process. Keep a "tax strategy" file that explains your decisions, backed by receipts, contracts, and correspondence.
- Perform an Annual Review
Tax planning isn’t a one‑time task. Each year, review your income, expenses, and business goals. Modify your structure, contributions, and deduction strategy accordingly to keep your tax liability as low as possible.
By combining these approaches—structuring your company wisely, maximizing deductions, timing income and expenses, and staying current with tax law—you can dramatically decrease the tax burden on a one‑person company. The key is disciplined record‑keeping, proactive planning and periodic consultation with a tax professional. The money you save can be reinvested in your business, used for personal enjoyment, or saved for future plans.
