Taxes are one of the unavoidable expenses that significantly cut into the profit margins of your jet charter business. Here, however, are a few tips to make sure you’re not spending more than necessary on taxes.
1. Choose a location where the sales taxes aren’t so high.
If you’ve yet to start your jet charter business, consider picking a location where the tax rates are reasonable. Aviation sales tax can range from 3% to 10%, which can be massive when upfront costs for an aircraft can be in the double-digit millions. For some purchases, the aircraft is delivered in a US state where there is no state sales tax (e.g., Oregon, New Hampshire, Alaska) so this may be a viable option for you. However, note that some states that do not have state sales tax have counties in particular that levy the tax, so do your research before planning where to make the transaction.
2. Find a tax professional with knowledge of the aviation industry.
It’s not enough to simply turn things over to any accountant or tax professional; you might miss out on significant deductions that are applicable to your business if you work with someone who is unfamiliar with aviation businesses.
3. Work with a qualified tax attorney.
While it may seem like an added expense, a tax attorney can also help identify the different exemptions that you can apply, as well as settle disputes with the government collecting agency, which could cost you large amounts in fines otherwise. He or she can also advise you of the different state or county regulations that you would have to abide by in order to not be charged certain taxes.
4. Be organized.
Always save the receipts for purchases, big or small, that are related to the business, and make sure your employees do the same. Keep them in monthly folders, and set aside a few hours each month for sorting through them.
5. Always pay on time.
With the high operating costs of an aircraft business, it might not always be easy to set aside the amount for taxes regularly. This is a necessity, however, because not paying the right amount of taxes on time can lead to hefty fines that could spell disaster for your business.
The good news is that keeping track of the amounts you have to pay doesn’t have to be difficult. There is tax preparation software that you can use to compute your amounts. While it will most likely still be better (and easier) to work with a qualified tax professional, the software will at least give you a good idea of what to expect, which should make it easier for you to plan your budget adequately.