Reduce Business Taxes
Strategies to Save Money
As a small business owner, it can be difficult to reduce business taxes and keep your business afloat. Between business expenses and tax liabilities, you may find that it takes a lot of effort actually see a profit at the end of the year. This is especially true for businesses that are in the beginning stages of life. To see the most revenue at the end of the year, you must find a way to minimize your tax liability. The following are 10 strategies to save money on small business taxes at the end of the year.
1. Hire Independent Contractors. Many small businesses save money by outsourcing work. If you don’t have “employees” you can miss out on paying Medicare and Social Security taxes that cost employers so much money. Find ways to hire independent contractors to do the work for you rather than having specific people who carry out job duties for your business. The internet has created an easy way to hire independent contractors who can provide quality work.
2. Keep proper books and records so that you can take deductions and reduce business taxes. Good business practices can actually save you money when tax time rolls around. Proper record keeping of every cent that comes in and goes out of your business can ensure that you won't be liable to pay even more taxes than you already have to pay. If you claim it, you must have proof to back it up. Do this by keeping pristine books and records.
3. Be a Giver. Just as with your personal income, you can reduce small business taxes by donating to charity. Charitable contributions can lead to heavy tax breaks. You must be sure to document them and have proof that you actually gave the money that you claimed to give.
4. Have a good accountant who knows how to get you the deductions you deserve. It is not recommended that you reduce business taxes yourself. When it comes to small business taxes, there are many details that you can miss or deductions that you simply do not know about. Let the professionals handle them in an effort to reduce your tax liability. If you do decide to tackle the taxes, it is also good to get a fresh pair of eyes to check your work. You don’t want to miss a single deduction! This puts cash in your pocket.
5. Choose to Itemize rather than take the standard deduction. Most small businesses come out better if they choose to itemize rather than take the standard deduction.
Explain to your accountant that you would rather itemize even though this will put you at greater risk of getting audited.
6. Stay on top of ever changing tax laws. Tax laws change year to year. Don't assume that because you were current on last year's law that you can follow those exact same laws and come out ahead. You can miss serious changes that can cost your small business money. Reduce business taxes by staying up to date on changing tax laws or choose an accountant who can stay on top of this for you.
7. Invest in your future by having a retirement plan. Saving for your future has a two-fold benefit. Not only will you be prepared for what life may bring when you are older, you can take hefty deductions for putting your money in thrift plans or other retirement systems.
8. If you have employees, give them yearly bonuses. It benefits you to treat your employees well. Instead of giving raises that will require you to pay in more small business
taxes, give them yearly bonuses.
9. Invest in additional property. If you are planning to expand your business, consider investing in property that you need to do so now. The interest that you pay on the mortgage is tax deductible and can help with your bottom line at the end of the year.
10. Be truthful, or it could come back to haunt you. Many small business owners have chosen to try to beat the system in an effort to avoid paying taxes. It is highly recommended that you be honest and truthful in your claims. Not doing so may result in paying higher penalties. Remember, for each claim that you make, have the evidence and proof to back it up in case you are audited. Tax fraud is real and can single handedly ruin your small business.
Use these ten tips to help reduce business taxes at the end of the year. There is no way to get around paying taxes for small business. However, one of your best strategies to save money is to choose an accountant who can ensure that you get every deduction that is available to you. How will you reduce your taxes this year?
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This guest article is by Stacy Woods, who writes for a web design Company that offers web designing services in Saudi Arabia and other parts of the Middle East.
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