We’ve heard this phrase often: It’s not about how much money you make, it’s about how much you keep. We spend money in the form of day-to-day expenses, travel, entertainment, and of course — Taxes! Tax planning is a life skill. You can safeguard a lot of your money by having a basic knowledge of taxation. It can be overwhelming for sure, especially if numbers aren’t your thing.

Charitable Organisations
Charitable giving is an opportunity to make a positive impact. It also serves as an effective tax planning strategy. Qualified charitable organizations can help reduce your tax liability. So there you have it — financial benefits and philanthropic too! Specific benefits will depend on your area and tax laws. However, more often than never, you can claim the amount donated as a deduction. This could move you into a lower tax bracket. Ensure that the organization qualifies as tax-exempt. You could consider non-monetary donations like clothing, household goods, or assets like stocks and real estate. These may be deductible at fair market value, providing extra tax advantages. Ensure receipts provided by the charitable organization, as evidence of the donation. What most businessmen won’t tell you is that they donate to charities where they are trustees. Creating a private foundation allows you to merge your charitable giving under a single entity. Besides, you have control over these funds even though they’ve already been ‘given away’. Head to our recent episode on Making Bank with KC Chohan, who is the founder of Together CFO, a tax advisory accounting and tax preparation firm based in Los Angeles, to learn more.

Strategic Ownership
Most businessmen don’t own assets in their name. They control these assets through trusts that own them. Many people choose family members as owners. This involves the intentional transfer of legal ownership of assets to family members (for instance) while retaining control over them. This also helps you shield your investments from potential creditors or legal claims. You safeguard your assets and help transfer wealth to the future generation. Don’t forget to consider legal frameworks when implementing ownership strategies. Consult tax professionals to ensure you are in compliance with relevant laws.

Selling A Business
Selling a business is a strategic move to reduce tax liabilities, but there is a lot to think about. Capital gains tax rates can impact you depending on the length of time you held the business. Understand the tax implications and plan accordingly. Use tax deferral strategies where possible. For example, reinvest the proceeds from the sale into another qualifying investment within a specific timeframe. You can save a lot of money in taxes by changing the ownership structure of your business. The company isn’t owned by you but by the trust. Post a sale, the trust is the beneficiary of the funds, leaving you to reinvest the money any way you choose. Tax laws can change, and individual circumstances vary. Stay informed or seek professional advice before you finalize a strategy.