At year-end, prepay items like insurance, property taxes, and rent, if the business has the financial wherewithal. Also, credit card charges are considered deductible in the period they are incurred. Section 83b Election. By utilizing an 83b election, the employee will pay taxes on the grant date for the stock options, lock in a cost basis for the stock, and the remaining appreciation after the grant date will be subject to the long-term capital gains rate instead of being taxed at ordinary tax rates at the time the stock options becomes vested. This scenario can save a dramatic amount of taxes for the employee if the stock appreciation is substantial.
Many startups utilize employees and their personal credit cards to pay for company expenses.
An accountable plan allows the corporation to deduct those reimbursed expenses and leaves those expenses off the employee s W-2. Otherwise, employees must report those expenses as income and deduct them on their personal tax returns subject to limitations. Companies in these zones save a lot of money in taxes, but these zones may not be a nice place to locate a corporate office. Cash Flow Management. Companies that do not project taxes will have a liquidity problem at some point.