What are some ways a business owner can minimize taxes? Discuss the legal and ethical aspects of your answers.

Answer 1

accurate record keeping. Knowing when during the year to make large equipment purchases. Having SEP accounts or other retirement arrangements set up. Using a health savings account. Understanding that as a self employed individual your "self employment tax" is just paying yourself first. You are your own employer so you pay your employer portion and you are the employee so you pay the employee portion as well.

Incorporating doesn't really help because the net income from the business is distributed to you anyway. Then it is taxed on the personal level as a dividend along with the w-2 wages you were paid from the corporation.