Tax Tips For Business Owners
When it comes to starting up and operating a business, every penny counts. Many business owners fail to budget in extra capital to pay for tax liabilities, and at this time every year, they end up barely scraping by or, worse yet, going in the hole as they attempt to settle with the IRS.
As many of us are not accountants, we don’t have intimate knowledge of current tax laws and the impact that they have on small businesses. It is almost essential to have a financial wizard in your back pocket to help you find those little tax breaks that make a big difference in the way you are able to run your business.
It’s your lucky day!
Fortunately for you, even if you don’t have a financier in your back pocket or extra time to deal with your books on a more intimate level, we have some simple and effective tax hacks that can keep you and your business afloat on April 15th and beyond. Follow these tips for tax-time success:
1. Get some good software. Tax planning software is absolutely essential for you, dear business owner. Something as simple as H&R Block or Turbo Tax will be adequate for preparing and filing taxes. Recent versions of each of these are “audit-protected,” meaning that they guarantee their calculations against the threat of audit by the IRS. If you still don’t trust yourself to get the job done right, consider hiring a professional to take care of the books, and focus on finding deductions that reduce your tax liability.
2. Follow spending trends and track deductions. Keeping track of spending can seem daunting to some, but it is a necessary part of making your business prosper. Online banking and credit card companies that are willing to send you itemized transactions on an annual basis make tracking your spending easier, but it is still easy to miss things. Ditch the shoeboxes full of receipts and start using software like Quicken or QuickBooks that will help you find deductible expenses that can help you come tax time.
3. Put money in your retirement account. We know you have expenses; we all do. It can be quite tempting to pour money into your business at first, especially when you are in the initial stages of building your business. You can actually shelter some of your income by putting it into a tax-sheltered annuity; this is simply smart business and strategic planning for the future. Start budgeting now, plan to take care of yourself, and put your hard-earned money where Uncle Sam can’t reach it as easily. You’ll keep more in your pocket now and in the future.
4.Know where you can take deductions. There are quite a few deductions that small business owners can take, particularly if you are operating out of your home. A small list of these deductions includes:
Vehicle expenses
Mileage
Home office equipment and operating costs
Salaries, benefits, wages
Office supplies and expenses
Client and employee entertainment expenses
You must keep impeccable track of these expenses, so it might be in your best interest to invest in quality software that can help you streamline things. Software like QuickBooks and Expensify will allow you to stay organized so you can approach tax season with more confidence.
5. Put your family members to work. Employing spouses, parents, and children has its tax advantages. When you hire a family member, it reduces the amount of tax liability that you owe, as you are able to deduct any wages paid as compensation. Make sure you strike a healthy balance between hiring family and other employees, or you might have the IRS questioning the integrity of your hiring practices.
6. Track your carryover. There are a few deductions that, when not used, can be carried over to the following year----if you keep track of them. Work with your tax professional to make a record of these qualifying deductions and use them to reduce this year’s tax bill a bit; every little bit helps.
Need a little guidance? We can help!
At MaxGroup Business Solutions, we are experts in all aspects of business, including saving money on taxes. Our comprehensive business packages and planning help you to keep money in your pocket while you are building the business of your dreams. If you want to minimize your tax liability and maximize your dollar, let us see what we can do for you! Visit www.maxgroupbusiness.com for more information. Your business should be booming in no time!