Disclaimer: This article is for informational purposes only, and not intended to offer tax or legal advice.

Business owners across virtually all industries are routinely looking for ways to reduce their tax liability for a number of reasons. The first being the most obvious; when businesses pay fewer taxes, they keep their hard-earned revenue within their organization to grow their company or contribute to wealth-generating initiatives like Executive Bonus Plans (EBPs).

Tax liability consultants can help New York business owners reduce their tax liability while also enabling them to make responsible contributions to retirement funds, as well as getting the life insurance they deserve. They can help you navigate the complexities on the path to reducing your tax liability, and help make sense of the sometimes confusing legal requirements and jargon.

Here are solutions tax consultants can impart to help ensure you’re on a path to reduced tax liability—and real wealth.

How to reduce your tax liability

This is one of the most common questions tax consultants get, which isn’t entirely surprising. Businesses are always on the lookout for novel ways to reduce their tax liability and spend their money through more advantageous avenues.

While some business owners spend months or years trying to figure it out, the most effective and one of the simplest ways to do so is by implementing EPBs.

So, what are EBPs? Executive Bonus Plans enable business owners to provide supplemental benefits to executives and highly valued employees. It works by:

• Paying key executives a taxable income bonus
• Deducting that payment as a business expense
• Enabling the recipient to purchase an index universal life insurance policy that can grow in cash value; that growth is tax-deferred.
• Attracting and retaining key talent at the executive level, ensuring that the business is investing in exceptional employees while reducing tax liability

Executive Double Bonus Plans

While EBPs are an excellent, effective way to reduce your tax liability, Executive Double Bonus Plans (EDBPs) go a step further. These plans enable businesses to fund retirement and provide secure life insurance simultaneously.

Both plans are quickly becoming business owners’ preferred alternative to traditional deferred compensation plans which have remained commonplace for decades despite hurdles and complications. EBPs and EDBPs are advantageous for both S and C corporations, and offer much for flexibility and freedom when compared to the outdated death and retirement plans used by many companies today.

Both EBPs and EDBPs mean that your organization does not have to deal with ongoing tax liability related to deferred compensation plans. Deferred compensation has long been (and remains) a problematic point on businesses’ balance sheets.

When you pivot to EBPs or EDBPs, you remove any deferred payments, meaning that you are only required to pay these individual premiums as wages, thus reducing your tax liability and streamlining your reporting.

Reduce your tax liability with Real Wealth Solutions

We believe business owners deserve to keep as much of their hard-earned revenue as the law allows. While many business owners struggle to find ways to reduce their tax liability, Real Wealth Solutions is here to help.

Our tax consultants can help you implement a plan to pay out EBPs or EDBPs to reduce your tax liability, as well as get the cash-value life insurance policies you and your key executives deserve.

Ready to get started? Reach out to us now.