Can You Use Tax Breaks in Your Favor When Franchising?
As a business owner, or future business owner, it's important to understand the full scope of tax laws and how their changes will affect your bottom line. This is not only because you will be collecting and turning your own personal taxes, as well as employees' cuts, but because you'll be looking after business taxes. This total, of course, will vary depending on the fiscal year, your type of business, and whether or not you include sales tax (some states are exempt) on top of what will need to be paid in to Uncle Sam.
But that's not the only thing to be keeping track of with taxes. Based on changing laws (federal, state, and local), your franchise tax bill might – and is likely to – change from year to year. Staying up to date on the latest can give you a better heads up when tax time rolls around (whether you pay quarterly or annually), and it can keep you informed to vote on key issues.
All in all, that means the short answer to the above is yes – absolutely! You can use tax advantages in your favor. Based on what's available at the time, you can adjust your upcoming franchise location in order to get the best financial deal possible.
How to Keep Up with the IRS and Local Taxes as a Franchisee
When you know just how your franchise location will be affected by a proposed tax change, you can be there to support or vote against it, depending on which outcome would best work in your favor.
Then again, there are tax laws that can affect your brand before you even open your location. For instance, if your town offers breaks to those restoring a historic location; look for available real estate in those boundaries. Or if you work through programs that hires students, veterans, or former criminals, you can earn dollars back on your taxes, and so on.
The only way to cap these tax savings is to know they exist.
To stay informed, be sure to follow news outlets. Check websites that break tax news, follow social media accounts, and more. You can tune in to radio channels, or simply set Google alerts that funnel into your email account. That way when a big announcement is made, you'll be in the know.
This is important because the sooner you're able to update your franchise business based on changing laws, the sooner you can save. In the same light, you can prevent costly oversights. When the same status didn't cost the year before, it's easy to overlook these changes until tax time rolls around.
Finally, get an account you trust. You're putting your business in their hands, so to speak, and not prepping for the right financial changes can leave you and your franchise deep into debt. Instead, be sure you have the right information on hand and that you're working with a trained accountant who stays in the know, no matter how often tax laws are changing.
What Tax Savings Are Available for Franchisees?
Because tax laws are changing so often, this list will vary from year to year, as well as by location. Depending on where you are (state, town, county, etc.) and what type of industry you're entering into, tax breaks could range across the board. The key take away is that yes, they exist, and yes, you can save money on taxes by following specific guidelines. However, be sure to read the fine print so you don't make yourself ineligible. It's also a good idea to learn the basics early on (as in before you start your franchise business) so you can prep as much as possible.
By staying informed (and ensuring you have an accountant who does the same), you can easily help your franchise business save on tax dollars or funds due to the IRS or local entities. Start researching what's available to learn how you can get the biggest bang for your buck while saving along the way.
By Bethaney Wallace | Jan 09, 2020 | General Franchise Information