Taxes are one of the biggest expenses for businesses in Missouri, but there are strategies to reduce a business’s tax liability and leave more revenue in its coffers. Let’s explore the various ways an attorney can help to minimize your company’s business taxes in Missouri.
Understanding Missouri Business Taxes
Companies in Missouri may incur various local, state, and federal business taxes. Some of the most common types of business taxes include:
• Corporate income tax – The good news is that many businesses must pay income taxes – which means they are making profits. Profits are good news. However, certain types of business taxation elections, such as partnership or Subchapter S taxation, allow businesses to pass income tax liabilities onto their owners at a lower overall rate versus other structures.
• Sales tax: Depending on what a business sells and how it purchases materials and supplies, it may have to collect sales taxes from customers and remit them to the local or state government. The regulations for sales/use tax collection and remittance are often vague. An inventory of business practices is needed to ensure no liability accrues unbeknownst to the business.
• Property taxes – Businesses that own property or whose commercial leases obligate them to pay property taxes may bear local property tax liabilities. This holds true for real estate and personal property (equipment used in operations). UGBB helps its clients with assessment appeals covering real estate, personal property, and manufacturing equipment. Of particular interest is taxability for companies involved in interstate transactions. Here, apportionment is required, which can lead to savings when adequately reported.
• Payroll taxes – Virtually all businesses must collect their employees’ estimated income and Social Security/Medicare taxes and remit those taxes to the government; businesses must also pay the employer’s share of Social Security/Medicare taxes. Different categories of wages and salaries within certain industries have unique treatment options.
• Excise taxes – Businesses may have to pay taxes for using various goods, such as machinery, heavy vehicles, or fuel. Again, when a company is involved in interstate commerce, a close look should be taken at policies and procedures.
Strategic Tax Planning Considerations
Importantly, an attorney can help a business minimize its tax liabilities through a detailed review of tax laws and regulations against the facts and circumstances of how a company operates. This review procedure is often called a “reverse audit.” Taking the results of the review into account, strategic tax planning can take place. Business tax planning includes determining the optimal corporate and taxation structure, such as establishing a business as a corporation or electing pass-through taxation. The business’s corporate and tax structure may allow it to take advantage of specific deductions, credits, and exemptions that can help reduce tax liabilities. Often, your attorney will coordinate with your tax accountants to develop the best overall strategy. There is no best time to start a reverse audit. But keep in mind that tax benefits are likely slipping away daily, not to mention that some matters, such as assessment appeals, have strict filing deadlines. So, if one waits too long, a whole year must pass before an appeal can be filed. Our experience includes watching tens and hundreds of thousands of additional taxes paid due to missing filing deadlines.
Ensuring Tax Compliance
Businesses can also avoid unnecessary fines and penalties by working with an experienced attorney to ensure the company’s compliance with applicable tax laws and deadlines. Proactive compliance strategies can help reduce a company’s risk of becoming the target of an audit, which can result in extra legal and accounting expenses and may lead to additional tax liabilities plus fines and interest.
If a business does become the target of an audit, a knowledgeable business tax attorney can represent the company and help resolve the audit or other tax disputes as efficiently as possible to minimize expenses and tax liabilities.
Taking Advantage of Tax Incentives
The Missouri and federal government offer numerous industries various tax incentives that can help reduce a business’s tax liabilities. For example, a business may receive a tax incentive or credit for creating new jobs. Companies may also take tax deductions or credits for research and development expenses. An attorney can help a company identify available incentives that can reduce the company’s taxes.
Contact a Business Tax Attorney Today
An experienced business lawyer can help your company minimize its tax liabilities to maximize its profits. At UGBB, we have attorneys with tax accounting backgrounds, which augment their legal knowledge. Contact Uthoff, Graeber, Bobinette & Blanke today for a free initial consultation with our legal team to discuss possible strategies to help reduce business taxes in Missouri.