How CEOs Can Maximize Business Profits Using the Tax Code

By Contributing Author

Each and every year, without fail, the IRS updates the tax code. It’s considered a living document because it’s regularly updated by the federal government to include new rules for individuals and businesses. As a CEO, you’re trying to grow your business, which means you need to do everything in your power to decrease expenditures and maximize profits. The following outlines the many ways you can break down the Tax Code, and use its current set of rules to make sure you’re in the black at the end of the year.

Tax Credits and Incentives

The most complicated thing about the Tax Code is that it’s routinely updated. This means you could be missing out on new deductions and incentives for savings if you haven’t revisited the document in some time. Attorney and tax expert, Heather McGeorge,  recommends keeping up-to-date on changes all year round, which for large businesses may mean subscribing to a tax credits module, such as what’s offered by tax credit expert ADP, and appointing someone to monitor it regularly.

A module will ensure you’re able to claim and keep all the credits that are available to your business. It also helps to ensure you’ve identified additional ways to earn credits, such as employing new hiring practices, creating new work opportunities, and more. For CEOs with large businesses, this is very meaningful because your hiring practices can help you save lots of money. If you consider that more than 50 percent of the Federal and State government’s tax incentives go unclaimed, you can begin to see how this module can provide clarity and savings.

Employee Savings and Tax Deductions

It’s true that the government rewards businesses that reward their employees. The Q1 2015 Spark Business Barometer Survey reported that only 19 percent of small business owners were utilizing a 401k plan to reduce taxes, which is disappointing considering the tax benefits 401k programs yield. Business with one hundred employees or less qualify for a $500 tax credit each year for the first three years. If a CEO chooses to match his employee’s contributions, the entire thing is a tax deductible expense.

Go Green and Get Tax Breaks  

Reducing your carbon footprint will save you money on utilities and paper costs, which is a benefit in and of itself. Certain green endeavors may also save you money at tax time. You can write off a number of green efforts, as well as you may qualify for tax incentives. Here’s a few examples of green efforts that the IRS rewards:

• New buildings or renovations that save 50 percent or more on energy costs for heating, cooling, and lighting.
• Switching to hybrid or electric vehicles in your fleet.
• Combined heat and power systems.
• Switching to renewable energy sources, such as solar.
• Install qualifying microturbines.

What Not to Do

The government isn’t going to reward you for doing your job, but they will fine you if you’re found to be not doing it. It’s essential that you compensate fairly and provide health insurance. The government is actively seeking out and fining business that defy the Tax Code. Even if it’s a matter of simple accounting inaccuracies, you could end up fined; so, check your paperwork twice and make sure to adhere to all codes.

Moreover, it’s probably not a good idea to start shoring money overseas. 2010’s Foreign Account Tax Compliance Act (FATCHA) isn’t the only way the government is starting to demand information on foreign accounts. And, even CEO Mark Cuban frowns on keeping funds offshore for tax reasons. It’s no longer seen as a smart investment choice, and CEOs are urged to keep their money on US soil and play ball with the US government. Overall, if you’re compliant and you stay up to date on tax changes, you should be able to save at the end of the year and keep your bottom off the bottom line.