10 Tax Saving Tips for Small Business Owners – If you’re the owner of a small business, filing your taxes can be complicated and difficult to manage, especially if you don’t have the time or money to pay someone else to do it for you. Fortunately, there are plenty of tax saving tips that small business owners can use to streamline the process and ensure they get the largest refund possible. This article will show you how to save money on your taxes every year so that you don’t miss out on any money that could otherwise be put towards your family or business growth.
1) Federal Taxes
The federal government taxes small businesses at the corporate tax rate, which is currently 21 percent. To save on taxes, small businesses can take advantage of deductions and credits. For example, the qualified business income deduction allows small businesses to deduct up to 20 percent of their income. Additionally, small businesses can claim the research and development tax credit, which allows them to deduct up to 20 percent of their research and development expenses. Finally, many states offer state-level incentives that help small businesses by reducing the amount of money they pay in state income taxes.
2) Sales Taxes
As a small business owner, you are probably always looking for ways to save on taxes. Here are some tax saving tips that can help your business
1) Claim Section 179 Expenses – You may be able to deduct up to $500,000 of Section 179 expenses from your taxable income.
2) Use Home Office Deductions – You may be able to deduct the percentage of your home office space used exclusively for business purposes if you use it regularly and exclusively as the principle place of conducting the business activity.
3) Take Advantage of State Enterprise Zone Programs – There are many states that offer incentives to businesses located in certain areas or near certain universities.
4) Consider Setting Up a Retirement Plan – If you do not have an existing retirement plan, then setting one up will give you an opportunity to reduce your taxable income while still having funds set aside for retirement.
5) Invest in Equipment That Is Only Used by Your Business – You may be able to claim depreciation on equipment that is only used by your business.
3) Use a CPA to Save Tax
A CPA can help you save on taxes by ensuring you are taking advantage of all the deductions and credits available to your business. They can also help you plan for upcoming tax changes that may impact your business. Here are 10 tax saving tips for small business owners
4) Check in With State Agencies Section
How Can a Small Business Save on Taxes? As a small business owner, you are your own tax advisor. It’s important to check in with state agencies about the tax requirements of your business. States have different rules and regulations that can impact your bottom line.
For example, if you live in Illinois, you’ll need to register with the Department of Revenue and make quarterly estimated payments. You also need to file an annual return with the state government by April 15th each year. The fee for filing this form is $25 if your annual gross receipts are less than $100,000 or $250 if they exceed $100,000.
One way to save on taxes is through a retirement plan. If you set up a qualified retirement plan such as a SEP IRA or 401(k) account, you may be able to deduct contributions from your taxable income at the federal level and lower the amount of Social Security taxes paid.
5) Keep Records
As a small business owner, you should keep records of all your business expenses throughout the year. This will help you stay organized and make it easier to file your taxes come tax season. When it comes time to file your taxes, make sure to take advantage of any and all tax deductions and credits that you may be eligible for. Doing so can save you a significant amount of money come tax time. If you are uncertain about what is allowable as a deduction or credit, contact an accountant who specializes in small businesses. You might also want to ask your state’s department of revenue if they offer any discounts or programs tailored specifically for small businesses.
6) Know Where To Deduct Costs
Many small business owners don’t know where to start when it comes to deducting costs associated with their business. The first step is to track all of your expenses. This includes both business and personal expenses. Once you have a good understanding of where your money is going, you can start to look for areas where you can save.
7) Track Expenses and Reimbursements
One way small businesses can save on taxes is by tracking expenses and reimbursements throughout the year. This can be done by setting up a system where all receipts are stored in one place and categorized by type of expense. At the end of the year, you can then total up these expenses to get an idea of how much you spent on business-related activities.
8) Consider an S-Corp or C-Corp
One way small businesses can save on taxes is by setting up an S-Corp or C-Corp. Doing so can help you avoid paying double taxes on your profits. Speak with a tax advisor to see if this is the right move for your business. Other tax saving tips for small businesses include:
1. Hiring family members
2. Taking advantage of deductions
3. Investing in energy-saving equipment
4. Keeping track of expenses
5. Filing taxes electronically
9) Look Into Health Insurance Options
Health insurance is one of the biggest expenses for small businesses, but it is also one of the most important. There are a few different ways that small businesses can save on their health insurance costs. One way is to look into health insurance options that allow you to customize your coverage. This can help you save on costs by only paying for the coverage that you need. Another way to save on health insurance costs is to offer employees incentives to stay healthy. One option is to provide an employee wellness program where they earn money back if they complete certain fitness activities. Other companies have found success with a group discounting plan where they will reduce the company’s premium if all employees participate in programs like smoking cessation or weight loss plans.
10) Be Organized!
The first step to take when you want to save on taxes is to be organized. Gather all of your receipts and keep track of your expenses throughout the year. This will make it easier to file your taxes and ensure that you are taking advantage of all the deductions you are entitled to. It’s also important to invest in a good accountant or tax professional who can help you find additional deductions, identify credits, and avoid costly mistakes. One way a small business can save on taxes is by reducing their taxable income with things like donating inventory, providing employee discounts, or by offering discounts to veterans.