6 Ways to save on Taxes

Taxes are one of the biggest expense that you have as a business owner and you should do what you can to save on them. This will also allow you to use the funds you have left more productively and to put them towards improving your business.

This isn’t to say that you won’t pay taxes or that this is about any loopholes. Instead, it’s about practices and systems that you should put in place and that can help you be better organized financially, in the long run.

Be on time

This is the first and the simplest thing you can do but too many businesses fail in doing so. Simply put, you should be on time when you pay your taxes. The same goes for reporting your taxes and all other obligations you have towards the IRS.

This means you’ll pay less since the IRS encourages paying on time. It also allows you to build a relationship with the IRS and to use it to get more time when you need it and when you end up being late. It can help save your business when things get difficult.

Retirement

Retirement plans are one of the best ways you could use to save on your taxes and to help your employees with a long term financial planning. That’s because it’s one of the benefits the employees want the most and that will keep the best of them loyal to the business.

This is also a way to save on taxes since the money put towards retirement fund isn’t taxes. In most cases, it’s actually not taxes until the retiree takes the funds out of the account and actually retires. Even then there’s a tax free allowance to use.

Equipment and depreciation

There are purchase you can make that will help you save on taxes. That’s because some of the purchase are essential for the running of the company and those don’t require you to pay taxes. This is called and equipment and deprecation tax deduction.

The deprecation part refers to the fact that the equipment loses its value and usage over time and that it needs to be replaced which is also covered with the tax break. There are a lot of rules in regards to using this tax break so you should hire an accountant to help.

Deductibles

There are also plenty of expenses that are deductible from your taxes and you should use those to both get the most out of the tax code and to provide the benefits that your employees would want and use. There are a few major areas to focus on. These are: gifts, bonuses, and awards.

These are not only important due to their tax status, but also because the fact that they play a role in the office politics. They will allow you to reward the best employees and to create a transparent path to professional success at your company.

Timing

Taxes are paid on a schedule and that means that you can use the timing to be better organized with your taxes and more precisely with the income that you get. You can get a better tax rate by making sure that your income is split between two tax years. That will make it lower in both of them since you won’t go over the cut off line for the tax rate.

This is an option that will suit you better if you know how much your business will earn in each of the quarters.

Debts

There are ways to use the debts that your business has to lower the taxes that it needs to pay. That’s because all the debts that your company has at the end of the year will be deducted from the taxes for that year. It’s a way for the government to help the struggling companies before they have to make cuts.

This is where the help of a professional accountant can help since they can help you structure a business so that you use parts of it to fund the others and to use the bad debts to your advantage.

Conclusion

There are many ways to save on your taxes just by paying attention to the tax code and by using the rules to their fullest extent. These are sometimes as simple as making sure that you pay your taxes on time and sometimes about the complicated process of writing off the expenses made on equipment.

These will also require a help of a professional accountant and even though it’s an expense for a small company, it’s one that you should try to bear because it will end up being worth it for your company in the long run.