Issue link: https://read.dmtmag.com/i/620640
Reductions are possible for business owners who strategize and plan ahead s the tax rates on top e a r n e r s c o n t i n u e t o rise, many winery and vineyard owners are look- ing for new ways to reduce what they're required to pay in taxes. The good news is that there are many tax plan- ning opportunities for wine businesses at both the state and federal levels. If you're willing to invest some time in researching and imple- m e n t i n g t h e m , y o u c a n reduce your overall expo- sure significantly. Let's look at a few ways that wineries and vineyards can reduce what they owe, both early on and as they continue to grow. ENTITY STRUCTURE PLANNING Good structuring is criti- cal – not only from a tax per- spective, but also from legal and business perspectives – regardless of whether you're starting a wine business from scratch or purchasing an existing one. The entity type you choose depends heav- ily on your long-term goals for the business, and each comes with pros and cons. On the tax side, C corpo- ration structures are less common due to the double taxation that occurs. Limited liability companies (LLCs) have traditionally been the most popular vehicle, but S corporations are gaining ground as a result of the Affordable Care Act. Unlike an LLC, the flow-through income from an S corpo- ration to an active share- h o l d e r i s n o t c o n s i d e r e d self-employment income; as a result, it is not subject to self-employment tax or the additional 0.9% Medicare tax that went into effect in 2013. Reductions are possible for business Tax for Wineries and Vineyards Opportunities Tax Tax BY MICHAEL RICIOLI, CPA 1 4 6 w w w. v w m m e d i a . c o m